Despite of the slowdown hitting the economy, mid-sized PSU banks loan portfolios record a steady expansion.

The profits of these banks have also reported a substantial rise and even the bad loans are well under control. All this has been witnessed in respect of the results of the last quarter of the previous fiscal.

For instance the loan growth of Bank of India (BoI), Union Bank of India (UBI) and Bank of Baroda (BoB) has been recorded at a much higher level than the industry average. The year on year growth in the loan portfolios of BoI, UBI and BoB was reported at 26.1%, 30.4% and 36.6% respectively during the March quarter. Although there has been a considerable growth in the loan books of all the three banks but BoI needs to tighten the belt as its growth rate was higher in the December quarter.

Meanwhile the profits of BoI and UBI have come down in the last quarter. For BoI the profits came down to as low as 7% in March quarter from as high as 70.4% in December quarter. Similarly the UBI's profit growth came down by 10.8% in the March quarter from 84% rise in the December quarter. However BoB managed to increase its profits four times by 172.3% in the last quarter.

Even the net interest income (NII) that comprise of the main part of earnings of the banks declined for both BoI and UBI. In case of UBI, the NII grew by only 11.1% in the last quarter against a growth of 50.1% in the preceding quarter. This was a result of the increased cost of deposits and advances during the December quarter due to the rising interest rate. There were expectations of more severe fall in NIIs as PSU banks were taking moves to attract investors by raising their deposit rate while keeping the lending rates untouched.

Although the constant moves taken by the banks affected their earnings growth but in case of BoB, the growth rate was unaffected. The bank marked a 43% rise in its NII during the March quarter as compared 46.6% growth in the December quarter.

The other incomes like fee based income of the PSU banks also increased at high rates during the period under review. BoI, BoB and UBI recorded growth of 20.2%, 53.9% and 79.9% respectively in their other income during the last quarter of the fiscal.

The net non-performing assets (NPA) also remained almost same and were recorded at less than 1% of the net advances of the banks. As a result the asset quality of the banks remained intact.

At the same time the mid-sized PSU banks are also increasing their efficiency and trying to bridge the gap with top private sector banks.