Interest income of banks increased by a record 25.5 percent, shares will run at the speed of rocket. Interest income of banks increased by a record 25.5 percent, shares will run at the speed of rocket

net interest income of banks (NII) grew by a record 25.5 per cent to reach Rs 1.78 lakh crore in the quarter ending December 2022. This reflects a situation of better credit offtake and higher yields on loans. This fact has emerged from an analysis. Banks have earned higher earnings on loans during the quarter. Net interest margin (NIM) of banks increased by 0.17 percentage points to 3.28 per cent during the quarter. Sanjay Agarwal, senior director, Care Ratings, said this is because banks re-rated existing loans at a higher rate and increased interest rates on new loans. On the other hand, he did not change the deposit rates. Market experts say that its effect will be seen on the shares of many good banks. Some bank shares will run at the speed of rocket.

Private sector bank earned tremendous

The increase in net interest margin was led by private sector banks. Their NIM rose by 0.15 per cent to 4.03 per cent on an annual basis. On the other hand, the NIM of public sector banks increased by 0.17 percent to 2.85 percent. Net interest income or NII is the main source of revenue for banks. It is the difference between the interest earned by the banks and the interest paid on the deposits. Aggarwal believes that the re-pricing of liabilities will stabilize the net interest margin going forward. He said that loan demand remained in high double digits, so now some leading banks have started giving higher returns to depositors. The Reserve Bank of India has increased the key policy rate repo by 2.50 per cent since May last year. Inflation remains above the Reserve Bank’s comfortable level of four per cent (two per cent up or down).

Meeting with bank chiefs on 22 February

The Finance Ministry has called a meeting of heads of public sector banks and four private lenders on February 22 to review the Emergency Credit Line Guarantee Scheme (ECLGS). ECLGS was launched to help the business sector affected by COVID-19. Sources said that in this meeting the progress in ECLGS and Credit Guarantee Scheme in Corona affected areas (LGSCAS) will be reviewed. Representatives of leading private sector banks HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank will also attend the meeting to be chaired by Financial Services Secretary Vivek Joshi. Extension of ECLGS and LGSCAS beyond 31st March along with challenges related to these will also be discussed.

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