SCBs interest income: Scheduled Commercial Banks (SCBs) reported a 9.7 per cent YoY growth in Net Interest Income (NII) in the third quarter of FY24  to Rs. 1.94 lakh crore driven by robust loan growth and higher yields on advances, the report by CareEdge stated on Tuesday. 

According to CareEdge, excluding merger impact, NII for SCBs grew by 6.8 per cent. Advances saw a significant 20.3 per cent YoY rise, driven by mergers and personal loans, with retail growth maintaining momentum.

Deposit growth and CASA

Deposit growth was at 13.3 per cent YoY, with Private Banks (PVBs) outpacing Public Sector Banks (PSBs). The CASA Ratio declined to 38.6 per cent, impacting credit-deposit ratios. The Net Interest Margin (NIM) remained flat at 3.14 per cent, influenced by rising deposit costs.

PSBs and PVBs reported NII growth of 4.5 per cent and 16.8 per cent YoY, respectively, with Large PVBs leading at 17.2 per cent YoY growth. Interest income rose by 30.9 per cent YoY, and interest expenses increased by 43.9 per cent YoY. NIMs declined by 16 bps YoY at 3.14 per cent, with PVBs seeing a higher decline at 32 bps (3.75 per cent) compared to PSBs (2.77 per cent).

Sequentially, SCBs remained flat at 3.14 per cent NIM, with PVBs showing a marginal uptick of 1 bps, while PSBs stayed flat. 

Uneven interest rate transmission and a lag in deposit rates impacted performance. Overall, the report provides insights into the performance, growth drivers, and challenges faced by SCBs in the specified quarter.