Performance of public sector banks in terms of profits and asset management in the third quarter of the current fiscal was better than those of private peers, a study by industry body Assocham said.
"The PSBs have managed to record higher average net profit and lower non-performing asset (NPA) level than their private sector counterparts," the study, based on the quarterly results of 25 banks including 15 PSBs, said.
The net profit of public banks jumped by 57 per cent as compared with 44 per cent rise in the bottom line of their private competitors, it said.
The study further said rise in net NPAs of the private banks was higher at 44 per cent than the PSBs at 29 per cent.
However, it also revealed that the quality of bank assets deteriorating significantly with an average 34.46 per cent rise in net NPA accompanied by a slippage in average capital adequacy ratio to 13.22 per cent in the quarter under review from 13.39 per cent in a year-ago period.
The aggregate net NPAs of the 25 banks increased to Rs 19,899.47 crore in the third quarter, from Rs 15,962.58 crore in the corresponding period last year.
The PSBs reduced their prime lending rates by 75-125 basis points while those banks in the private sector cut the rates only by 50-75 basis points, it said.
The credit of PSBs grew by 28.6 per cent while that of private banks grew by 11.8 per cent, it added.
Despite lower lending rates, the net interest income growth of the PSBs was much higher at 50 per cent as against 32 per cent growth witnessed by private banks, it said.
"In divergence to the turmoil in the global banking institutions, Indian banking sector stands tall with stupendous growth in profits, however rise in NPAs may remain a key challenge," Assocham Secretary General DS Rawat said.