Performance of Banks in Q1FY25

In Q1FY25, most banks saw double-digit revenue growth, with improved asset quality. Some faced profitability pressure due to higher provisions, while others reported falls in revenue or profit. Public sector banks like Bank of Maharashtra and Indian Overseas Bank, and private sector banks such as IDFC First Bank, RBL Bank, and Kotak Mahindra Bank, reported strong revenue growth. Punjab National Bank, UCO Bank, and Central Bank of India reported significant growth in profits. Performance of banks in Q1FY25 indicates strong tailwinds that may provide strong traction to the economy.

Performance of Banks in Q1FY25 was exceptional. Nearly all the reported double digit increase in Revenue during Q1FY25. While the RBI is still dilly-dallying on the rate cuts, the banks continue to have good growth in advances. The asset quality of most of the banks also improved in Q1FY25 when compared with the corresponding quarter of last financial year.

There was pressure on profitability of a few banks due to higher provisions. Out of 34 banks, 32 reported double digit growth in Revenue. IDBI Bank reported 3% fall in Revenue in Q1FY25 in comparison with the corresponding period of the last financial year. The comparison of HDFC Bank’s Q1FY25 results with Q1FY24 results won’t be correct as the merger between HDFC and HDFC Bank came into effect from 1st July 2023.

Surprisingly, IDFC Bank reported a fall in profit as it made more provisions on account of higher defaults in its microfinance business. The bank clarified that this was a one time impact and a little more provisions will be made during Q2FY25.

Among the Public Sector Banks, Bank of Maharashtra and Indian Overseas Bank reported over 20% growth in Revenue. Private Sector Banks performed much better as IDFC First Bank, RBL Bank, Kotak Mahindra Bank, Bandhan Bank, CSB Bank, Karur Vyasa Bank, DCB Bank and ICICI Bank reported more than 20% increase in Revenue. The small finance banks had a very good quarter in terms of Revenue. AU Small Finance Bank, Fino Payments Bank, Suryoday Small Finance Bank, Utkarsh Small Finance Bank, and Ujjivan Small Finance Bank reported revenue growth of more than 20%.

Punjab National Bank, UCO Bank and Central Bank of India reported 207%, 147% and 107% growth in PAT, respectively.