Banking woes hit India Inc's profits

The persisting woes in the Indian banking sector have hit overall corporate profits.

According to data provided by Care Ratings, the net profit of India Inc declined by Rs 36,008 crore, translating to 10.9% decline in for the 2017-18 fiscal.

The 1,256 listed companies that the global rating agency took into consideration clocked a total net profit of Rs 2,94,193 crore in 2017-18, against Rs 3,30,201 in 2016-17.

The gamut of 34 public sector and private sector banks saw an aggregate loss of Rs 29,887 crore during the year, compared with the profit of Rs 48,568 crore in 2016-17.

Excluding the banking sector, 1,222 companies from various other sectors saw their bottom line jump by Rs 42,447 crore or 15.1%.

The non-banking companies clocked a profit of Rs 3,24,080 crore during FY18, as against Rs 2,81,633 in the preceding year.

The situation has been grimmer in the public sector banks (PSBs), with none of the 21 PSBs, excluding Vijaya Bank and Indian Bank, making profits during the year.

DH had earlier reported on the grim situation prevailing in the PSBs.

Out of the 21 PSBs, 19 have made losses, with many of them exceeding thousands of crores. The cumulative loss clocked by the 19 PSBs in just three months of the last financial year amounts to a whopping Rs 63,020.60 crore, as per the banks' filings with BSE for the quarter.

The scam-hit Punjab National Bank (PNB) reported the worst losses in the quarter ended March 31, 2018, amounting to a whopping Rs 13,416.9 crore.

On the annual basis as well, these 19 PSBs are in the red, with a collective loss amounting to Rs 87,356.7 crore, with PNB again leading the list with a loss of Rs 12,282.8 crore.

The banks have been hit by stricter RBI norms on non-performing asset management, complemented by a decline in loan growth. With the threat of inflation and monetary policy becoming more hawkish, there is not much hope for banks to see a good loan growth, according to industry insiders.

Meanwhile, hit by pharmaceutical and drugs market slowdown, India's consumer goods companies profits declined by 19.5% to Rs 19,964 crore in 2017-18, against Rs 24,798 crore in 2016-17.

According to the rating agency, pharmaceutical and drugs companies have been hit by increased competition and price erosion in the US generic market during the quarter.