Private sector banks’ profits jump on faster credit growth

Earnings of private sector banks jumped 25% from a year ago during the fiscal second quarter on faster credit growth and as they set aside less money to cover potential loan losses.

Loan growth was strong for most banks on a sequential basis, led by retail loans and those against properties. Kotak Mahindra Bank surprised investors with a 14.7% growth in the loan book in the September quarter from a year ago and 8% sequentially, led by its mortgage book. Home loans, along with loans against property, now constitute close to 26% of Kotak’s overall loan book after the bank cut home loans rate to 6.5%. Loans sourced digitally doubled from the June quarter.

ICICI Bank posted a 19% growth in its domestic loan portfolio from the September quarter of the previous fiscal.