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Key Points

Public sector banks have emerged as strong performers in the fourth quarter of the financial year 2025, outshining private banks with impressive profit growth. The CareEdge Ratings report highlights a significant 4.3% increase in net profits for Scheduled Commercial Banks, driven by business expansion and improved asset quality. While private banks faced challenges, particularly from accounting issues in one major institution, the overall banking sector showed resilience. The declining Net Non-Performing Asset ratio to an all-time low of 0.5% further underscores the sector's improved financial health.

Key Points: Public Sector Banks Beat Private Lenders in Q4 Profit Surge

  • Public sector banks record 13.1% net profit growth
  • Private banks face challenges from accounting issues
  • Banking sector's NNPA ratio drops to 0.5%
  • Loan growth supports financial performance
2 min read

Public sector banks outshine Private lenders in Q4FY25 profit, driven by business expansion: CareEdge Report

CareEdge Report reveals public sector banks outperform private banks with 4.3% profit growth and improved asset quality in Q4FY25

"Net profit for SCBs increased by 4.3 per cent year-on-year to Rs 0.93 lakh crore - CareEdge Ratings Report"

New Delhi, June 4

The government-owned banks have reported higher profits than their private sector counterparts in the fourth quarter of the financial year 2025, according to a recent report by CareEdge Ratings.

The report shows that Scheduled Commercial Banks (SCBs) collectively witnessed a moderate improvement in their financial performance in Q4FY25.

The report said "Net profit for SCBs increased by 4.3 per cent year-on-year to Rs 0.93 lakh crore in the quarter, driven by business expansion.... Conversely, Private Sector Banks (PVBs) experienced a decline of 4.7 per cent, reaching Rs 0.42 lakh crore in Q4FY25".

Their Net Interest Income (NII), the difference between interest earned and interest paid, rose 3.6 per cent year-on-year (YoY) to reach Rs 2.09 lakh crore, supported by steady loan growth. However, this was partially offset by rising deposit costs, which impacted margins.

The Net Interest Margin (NIM) for SCBs declined 21 basis points (bps) YoY to 2.99 per cent, mainly due to slower growth in high-yield loan segments, increased deposit rates, and slower growth in low-cost CASA deposits.

Despite pressure on margins, net profit for SCBs increased by 4.3 per cent YoY to Rs 0.93 lakh crore in the quarter. This improvement came on the back of business expansion, lower provisioning requirements, and higher income from other sources.

Among SCBs, Public Sector Banks (PSBs) showed impressive growth, with their net profit rising 13.1 per cent YoY to Rs 0.51 lakh crore. This surge in profit is attributed to a low base in the previous year, better asset quality, gains from treasury operations, and controlled operating expenses.

In contrast, Private Sector Banks (PVBs) saw a 4.7 per cent decline in net profit, bringing their total to Rs 0.42 lakh crore in Q4FY25.

The fall was largely due to losses posted by one major private bank, which faced accounting mismatches, difficulties in the microfinance segment, and higher provisioning needs.

However, if this particular bank's performance is excluded, the overall profit of PVBs would have actually grown 5.4 per cent YoY, reaching Rs 0.46 lakh crore, showing relatively healthy growth.

The banking sector's asset quality also improved in Q4. The Net Non-Performing Asset (NNPA) ratio of SCBs dropped to an all-time low of 0.5 per cent, compared to 0.6 per cent a year ago

Overall, the report suggested that public sector banks have emerged stronger in the latest quarter, supported by improvements in profitability and asset quality, while private banks faced pressure due to isolated issues in select institutions.

- ANI

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Reader Comments

Here are 6 authentic Indian perspective comments for the news article:
R
Rajesh K.
This is great news! Public sector banks have really turned around in recent years. Remember when they were burdened with NPAs? Now they're showing private banks how it's done. Government's reforms are working 👍
P
Priya M.
As someone who works in banking, I'm not surprised. PSBs have improved their digital services while maintaining trust. Private banks focus too much on selling unnecessary products to meet targets. Quality over quantity wins!
A
Amit S.
The report shows one private bank dragged down the whole sector. Without that, private banks actually grew 5.4%. Headline is a bit misleading no? Both sectors are doing well overall 💯
S
Sunita R.
NNPA at 0.5% is remarkable! Shows our banking system is becoming more stable. But banks must not become complacent - they should use these profits to improve customer service and reduce charges for common people.
V
Vikram J.
PSBs doing well is good for financial inclusion. They serve rural areas where private banks don't go. But they must keep innovating - UPI has shown what's possible when public and private work together.
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Neha P.
Happy to see this turnaround but concerned about declining NIMs. With RBI keeping rates high, banks must find ways to maintain profitability without burdening borrowers. Tough balance to strike!

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