Most public sector banks are anticipating a much slower growth in net profit in the fourth quarter of 2006-07, Business Standard reports. Net profit is expected to decline by about Rs 50 crore per bank because of the increase in provisioning requirements from 1% to 2% on standard loans to capital market, real estate, personal loans and credit card receivables mandated by the RBI in credit policy statement for the third quarter. This will be offset to some extent by interest on CRR balances leaving a net impact of around Rs 30 crore.
That's pretty small for most banks. Banks are realising gains on recovery of stressed assets (on which they had made substantial provisions). Credit growth continues to be strong. Fee income is rising. Expect banks to sustain profit growth in line with the past two or three years in 2007-09.
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