Table II.6: Working Results of State Bank of India and 7 Associates for the years 1996-97 and 1997-98

						(Rs. crore)
Particulars				1996-97	1997-98	Variation of
						Column(3) over (2)
						Absolute	Percentage
1				2	3	4	5
A.	Income			23,276.85	24,871.11	1,594.26	6.85
	(i+ii)			(100.00)	(100.00)
	i)		Interest Income	19,923.05	21,208.84	1,285.79	6.45
				(85.59)	(85.28)
	ii)		Other Income	3,353.80	3,662.27	308.47	9.20
				(14.41)	(14.72)
B.	Expenditure			21,569.80	22,411.34	841.54	3.90
	(i+ii+iii)			(100.00)	(100.00)
	i)		Interest Expended	12,819.44	13,904.15	1,084.71	8.46
				(59.43)	(62.04)
	ii)		Provisions and Contingencies	2,750.76	2,272.57	-478.19	-17.38
				(12.75)	(10.14)
	iii)		Other Operating Expenses	5,999.60	6,234.62	235.02	3.92
				(27.81)	(27.82)
			of which : Wage Bill	4,353.08	4,675.33	322.25	7.40
				(20.18)	(20.86)
C.	Profit
	i)		Operating Profit	4,457.81	4,732.34	274.53	6.16
	ii)		Net Profit	1,707.05	2,459.77	752.72	44.09
D.	Total Assets			2,04,355.84	2,32,747.15	28,391.31	13.89
E.	Financial Ratios (per cent) $
	i)		Operating Profit	2.18	2.03	-0.15	-
	ii)		Net Profit	0.84	1.06	0.22	-
	iii)		Income	11.39	10.69	-0.70	-
	iv)		Interest Income	9.75	9.11	-0.64	-
	v)		Other Income	1.64	1.57	-0.07	-
	vi)		Expenditure	10.56	9.63	-0.93	-
	vii)		Interest Expended	6.27	5.97	-0.30	-
	viii)		Other Operating Expenses	2.94	2.68	-0.26	-
	ix)		Wage Bill	2.13	2.01	-0.12	-
	x)		Provisions and Contingencies	1.35	0.98	-0.37	-
	xi)		Spread (Net Interest Income)	3.48	3.14	-0.34	-

$		Ratios to Total Assets.
Note :		Figures in brackets are percentage shares to the respective total.

Indian Private Sector Banks

2.16   During 1997-98, the old Indian private sector banks, which constitute 7 per cent of total assets of SCBs, recorded increases of 29 per cent in operating profits and 9 per cent in net profits.  As a per cent of total assets, net profits came down from 0.91 per cent in 1996-97 to 0.80 per cent 1997-98 (Table II.8).  Among the 25 old Indian private sector banks, 13 banks had net profit ratio well above the overall net profit ratio.  The spread has shown a deceleration of 37 basis points, from 2.93 per cent in 1996-97 to 2.56 per cent in 1997-98.

New Private Sector Banks

2.17   New private sector banks constitute 3.3 per cent of the total assets of all SCBs in 1997-98 (2.4 per cent last year).  The new private sector banks recorded increases in both operating and net profits at 53 per cent and 43 per cent, respectively, during 1997-98; as a proportion of total assets, however, both operating and net profits were lower in 1997-98 than in 1996-97, mainly due to higher provisions on account of 100 per cent 'mark to market' of their investments.  In fact, new private sector banks has one of the highest provisions to total asset ratio (next to foreign banks) in India (Table II.9).  The operating profit ratio came down from 2.98 per cent in 1996-97 to 2.84 per cent in 1997-98, while the net profit ratio moved down from 1.73 per cent in 1996-97 to 1.55 per cent in 1997-98.  But the level of net profit ratio at 1.55 per cent of 1997-98 was far higher than the industry average of 0.82 per cent.  Out of 9 new private sector banks, 8 had net profit well above the overall net profit ratio of SCBs.  Also, a notable feature of the cost structure of new Indian private sector banks is the low intermediation cost of 1.76 per cent in 1997-98. New private sector banks exhibited one of the lowest intermediation cost ratios viz., operating expenditure to total assets (1.76 per cent in 1997-98) as compared with those of the public sector banks (2.66 per cent), old private sector banks (2.30 per cent) and foreign banks (2.96 per cent).  The share of the wage bill in intermediation cost at 17.5 per cent in 1997-98 (15.3 per cent last year) is the lowest among all banking groups.  Consequently the share of non-wage bill expenditure to intermediation cost which consists mainly of information technology related expenditure is as high as four-fifth of intermediation cost.  Like other banking groups, their spread (net interest income) too showed a decline from 2.88 per cent in 1996-97 to 2.18 per cent in 1997-98.

Chart  II.7  :  Intermediation Cost to Total Assets of Scheduled Commercial Banks - Bank Group-wise : 1996-97 and 1997-98

⁴ The recapitalisation exercise was confined to nationalised banks.

Table II.7 : Working Results of 19 Nationalised Banks

for the years 1996-97 and 1997-98

											(Rs. crore)
Particulars				1996-97		1997-98				Variation of
										Column (3) over (2)
										Absolute		Percentage
1				2		3				4		5
A.	Income			37,983.67		42,830.94				4,847.27		12.76
	(i+ii)			(100.00)		(100.00)
	i)		Interest Income	33,977.29		37,857.99				3,880.70		11.42
				(89.45)		(88.39)
	ii)		Other Income	4,006.38		4,972.95				966.57		24.13
				(10.55)		(11.61)
B.	Expenditure			36,538.55		40,263.65				3,725.10		10.19
	(i+ii+iii)			(100.00)		(100.00)
	i)		Interest Expended	23,519.18		26,260.47				2,741.29		11.66
				(64.37)		(65.22)
	ii)		Provisions and Contingencies	2,984.25		2,963.92				-20.33		-0.68
				(8.17)		(7.36)
	iii)		Other Operating Expenses	10,035.12		11,039.26				1,004.14		10.01
				(27.46)		(27.42)
			of which : Wage Bill	7,278.40		7,952.95				674.55		9.27
				(19.92)		(19.75)
C.	Profit
	i)		Operating Profit	4,429.37		5,531.21				1,101.84		24.88
	i.a)		Operating Profit exclusive of income
			from recapitalisation bonds	3,593.62		4,544.58				950.96		26.46
	ii)		Net Profit	1,445.12		2,567.29				1,122.17		77.65
	ii.a)		Net Profit exclusive of income	609.37		1,580.66				971.29		159.39
			from recapitalisation bonds
D.	Total Assets			3,51,940.19		4,16,439.24				64,499.05		18.33
E.	Financial Ratios (per cent) $
	i)		Operating Profit	1.26		1.33				0.07		-
	i.a)		Operating Profit exclusive of income	1.02		1.09				0.07		-
			from recapitalisation bonds
	ii)		Net Profit	0.41		0.62				0.21		-
	ii.a)		Net Profit exclusive of income
			from recapitalisation bonds	0.17		0.38				0.21
	iii)		Income	10.79		10.29				-0.51		-
	iv)		Interest Income	9.65		9.09				-0.56		-
	v)		Other Income	1.14		1.19				0.06		-
	vi)		Expenditure	10.38		9.67				-0.71		-
	vii)		Interest Expended	6.68		6.31				-0.38		-
	viii)		Other Operating Expenses	2.85		2.65				-0.20		-
	ix)		Wage Bill	2.07		1.91				-0.16		-
	x)		Provisions and Contingencies	0.85		0.71				-0.14		-
	xi)		Spread (Net Interest Income)	2.97		2.78				-0.19		-
	xi.a)		Spread exclusive of recapitalisation bonds	2.73		2.55				-0.19		-

$		Ratios to Total Assets.
Note:		Figures in brackets are percentage shares to the respective total.

Table II.8: Working Results of 25 Old Indian Private Sector Banks

for the years 1996-97 and 1997-98

												(Rs crore)
Particulars						1996-97		1997-98				Variation of
												Column (3) over (2)
											Absolute		Percentage
1					2		3				4		5
A.	Income				5,388.93		6,437.80				1,048.87		19.46
	(i+ii)				(100.00)		(100.00)
	i)		Interest Income		4,732.56		5,496.52				763.96		16.14
					(87.82)		(85.38)
	ii)		Other Income		656.37		941.28				284.91		43.41
					(12.18)		(14.62)
B.	Expenditure				4,983.24		5,995.44				1,012.20		20.31
	(i+ii+iii)				(100.00)		(100.00)
	i)		Interest Expended		3,431.20		4,083.77				652.57		19.02
					(68.85)		(68.11)
	ii)		Provisions and Contingencies		433.82		639.65				205.83		47.45
					(8.71)		(10.67)
	iii)		Other Operating Expenses		1,118.22		1,272.02				153.80		13.75
					(22.44)		(21.22)
			of which : Wage Bill		681.37		769.92				88.55		13.00
					(13.67)		(12.84)
C.	Profit
	i)		Operating Profit		839.51		1,082.01				242.50		28.89
	ii)		Net Profit		405.69		442.36				36.67		9.04
D.	Total Assets				44,456.62		55,205.37				10,748.75		24.18
E.	Financial Ratios (per cent) $
	i)		Operating Profit		1.89		1.96				0.07		-
	ii)		Net Profit		0.91		0.80				-0.11		-
	iii)		Income		12.12		11.66				-0.46		-
	iv)		Interest Income		10.65		9.96				-0.69		-
	v)		Other Income		1.48		1.71				0.23		-
	vi)		Expenditure		11.21		10.86				-0.35		-
	vii)		Interest Expended		7.72		7.40				-0.32		-
	viii)		Other operating Expenses		2.52		2.30				-0.21		-
	ix)		Wage Bill		1.53		1.39				-0.14		-
	x)		Provisions and Contingencies		0.98		1.16				0.18		-
	xi)		Spread (Net Interest Income)		2.93		2.56				-0.37		-

$		Ratios to Total Assets.
Note :		Figures in brackets are percentage shares to the respective total.

Foreign Banks

2.18   Foreign banks constituted 8.2 per cent of total assets in the banking sector in India in 1997-98 (8.3 per cent in the preceding year).  Their operating profits increased from Rs.2,032 crore in 1996-97 to Rs.2,544 crore in 1997-98 recording an increase of 25 per cent (Table II.10).  Due to heavy loss suffered by the Bank of Tokyo-Mitsubishi Ltd. in 1997-98, the foreign banks' net profit ratio declined from 1.19 per cent in 1996-97 to 0.96 percent in 1997-98.  Among the bank groups, foreign banks generally have a higher spread.  The spread of foreign banks also recorded a decrease from 4.13 per cent in 1996-97 to 3.92 per cent in 1997-98.  Their intermediation costs ratios were high at 2.96 per cent in 1997-98, marginally lower than 3.00 per cent incurred in 1996-97.  But share of the wage bill in intermediation cost was 32 per cent in 1997-98 as against 35.2 per cent in the previous year.  Foreign Banks generally incurred higher expenditure on information technology.  

Table II.9: Working Results of 9 New Private Sector Banks

for the years 1996-97 and 1997-98

							(Rs crore)
Particulars				1996-97	1997-98		Variation of
							Column (3) over (2)
							Absolute	Percentage
1				2	3		4	5
A.	Income			1,967.20	3,011.18		1,043.98	53.07
	(i+ii)			(100.00)	(100.00)
	i)		Interest Income	1,638.55	2,385.60		747.05	45.59
				(83.29)	(79.22)
	ii)		Other Income	328.65	625.58		296.93	90.35
				(16.71)	(20.78)
B.	Expenditure			1,687.12	2,611.66		924.54	54.80
	(i+ii+iii)			(100.00)	(100.00)
	i)		Interest Expended	1,172.64	1,821.00		648.36	55.29
				(69.51)	(69.73)
	ii)		Provisions and Contingencies	200.94	334.94		134.00	66.69
				(11.91)	(12.82)
	iii)		Other Operating Expenses	313.54	455.72		142.18	45.35
				(18.58)	(17.45)
			of which : Wage Bill	48.02	79.57		31.55	65.70
				(2.85)	(3.05)
C.	Profit
	i)		Operating Profit	481.02	734.46		253.44	52.69
	ii)		Net Profit	280.08	399.52		119.44	42.64
D.	Total Assets			16,159.69	25,855.85		9,696.16	60.00
E.	Financial Ratios (per cent) $
	i)		Operating Profit	2.98	2.84		-0.14	-
	ii)		Net Profit	1.73	1.55		-0.19	-
	iii)		Income	12.17	11.65		-0.53	-
	iv)		Interest Income	10.14	9.23		-0.91	-
	v)		Other Income	2.03	2.42		0.39	-
	vi)		Expenditure	10.44	10.10		-0.34	-
	vii)		Interest Expended	7.26	7.04		-0.21	-
	viii)		Other Operating Expenses	1.94	1.76		-0.18	-
	ix)		Wage Bill	0.30	0.31		0.01	-
	x)		Provisions and Contingencies	1.24	1.30		0.05	-
	xi)		Spread (Net Interest Income)	2.88	2.18		-0.70	-

$		Ratios to Total Assets.
Note :		Figures in brackets are percentage shares to the respective total.

Table II.10: Working Results of 42 Foreign Banks in India

for the years 1996-97 and 1997-98

							(Rs crore)
Particulars				1996-97	1997-98		Variation of
							Column (3) over (2)
							Absolute	Percentage
1				2	3		4	5
A.	Income			7,608.50	8,697.36		1,088.86	14.31
	(i+ii)			(100.00)	(100.00)
	i)		Interest Income	6,212.48	6,783.09		570.61	9.18
				(81.65)	(77.99)
	ii)		Other Income	1,396.02	1,914.27		518.25	37.12
				(18.35)	(22.01)
B.	Expenditure			6,942.20	8,067.40		1,125.20	16.21
	(i+ii+iii)			(100.00)	(100.00)
	i)		Interest Expended	3,896.05	4,222.29		326.24	8.37
				(56.12)	(52.34)
	ii)		Provisions and Contingencies	1,365.48	1,913.93		548.45	40.17
				(19.67)	(23.72)
	iii)		Other Operating Expenses	1,680.67	1,931.18		250.51	14.91
				(24.21)	(23.94)
			of which : Wage Bill	592.01	618.30		26.29	4.44
				(8.53)	(7.66)
C.	Profit
	i)		Operating Profit	2,031.78	2,543.89		512.11	25.20
	ii)		Net Profit	666.30	629.96		-36.34	-5.45
D.	Total Assets			56,062.79	65,287.69		9,224.90	16.45
E.	Financial Ratios (per cent) $
	i)		Operating Profit	3.62	3.90		0.27	-
	ii)		Net Profit	1.19	0.96		-0.22	-
	iii)		Income	13.57	13.32		-0.25	-
	iv)		Interest Income	11.08	10.39		-0.69	-
	v)		Other Income	2.49	2.93		0.44	-
	vi)		Expenditure	12.38	12.36		-0.03	-
	vii)		Interest Expended	6.95	6.47		-0.48	-
	viii)		Other Operating Expenses	3.00	2.96		-0.04	-
	ix)		Wage Bill	1.06	0.95		-0.11	-
	x)		Provisions and Contingencies	2.44	2.93		0.50	-
	xi)		Spread (Net Interest Income)	4.13	3.92		-0.21	-

$		Ratios to Total Assets.
Note :		Figures in brackets are percentage shares to the respective total.

Off-Balance Sheet Activities of Scheduled Commercial Banks

2.19   An interesting feature of the performance of SCBs is the growing exposure to off-balance sheet activities (Table II.11).  Off-balance sheet exposure to total assets of foreign banks amounted to 365 per cent in 1997-98 (266 per cent in 1996-97). In the case of new private sector banks, this ratio was 87 per cent in 1997-98 (85 per cent in 1996-97) (Chart II.8). In all other bank groups, the corresponding ratio was below 35 per cent.  The increase was mainly on account of 'forward exchange contract' and 'contingent liabilities' in all the bank groups with the exception of new private sector banks' group in respect of contingent liabilities.

Chart II.8 : Off -Balance Sheet Items to Total Assets of  Scheduled Commercial Banks -

Bank Group-wise : 1996-97 and 1997-98

Table II.11: Off -Balance Sheet exposure of Scheduled Commercial Banks in India

for the years 1996-97 and 1997-98

								(Rs.crore)
Bank Group	Forward exchange		Guarantees given		Acceptance,		Total Contingent
	contract				endorsements, etc.		Liabilities
	1996-97	1997-98	1996-97	1997-98	1996-97	1997-98	1996-97	1997-98
1	2	3	4	5	6	7	8	9
State Bank Group	17,696.17	37,614.53	15,734.88	16,757.13	18,544.91	16,848.35	51,975.96	71,220.01
	(8.66)	(16.16)	(7.70)	(7.20)	(9.07)	(7.24)	(25.43)	(30.60)
Nationalised Banks	50,935.85	71,455.44	21,304.76	23,783.57	21,639.65	22,297.40	93,880.26	1,17,536.41
	(14.47)	(17.16)	(6.05)	(5.71)	(6.15)	(5.35)	(26.68)	(28.22)
Public Sector Banks	68,632.02	1,09,069.97	37,039.64	40,540.70	40,184.56	39,145.75	1,45,856.22	1,88,756.42
	(12.34)	(16.80)	(6.66)	(6.24)	(7.22)	(6.03)	(26.22)	(29.08)
New Private Sector Banks	8,409.24	15,594.36	1,906.87	3,148.91	3,404.09	3,644.08	13,720.20	22,387.35
	(52.04)	(60.31)	(11.80)	(12.18)	(21.07)	(14.09)	(84.90)	(86.59)
Old Private Sector Banks	6,271.24	13,890.46	1,864.78	2,035.27	1,426.94	1,555.77	9,562.96	17,481.50
	(14.11)	(25.16)	(4.19)	(3.69)	(3.21)	(2.82)	(21.51)	(31.67)
Foreign Banks	1,25,968.05	2,12,597.10	11,541.60	13,049.13	11,749.56	12,773.56	1,49,259.21	2,38,419.79
	(224.69)	(325.63)	(20.59)	(19.99)	(20.96)	(19.57)	(266.24)	(365.18)
All SCBs	2,09,280.55	3,51,151.89	52,352.89	58,774.01	56,765.15	57,119.16	3,18,398.59	4,67,045.06
	(31.10)	(44.14)	(7.78)	(7.39)	(8.43)	(7.18)	(47.31)	(58.71)
Note : Figures in brackets are percentages to Total Assets.