The share of banks, financial services, insurance, and stock broking (or BFSI) in overall corporate profits reached a record high of 41.5 percent during the July-September 2022 period (Q2 of FY23), nearly double its historical 10-year average share of 21.8 percent, a report by Business Standard stated.
However, the report noted that this data is excluding the June quarter of 2020 when the share of BFSI jumped to nearly 60 percent because many other sectors saw a sharp fall in profits or reported losses following lockdowns amid the outbreak of Covid.
In comparison, the BFSI segment accounted for 30 percent of India Inc’s combined earnings in the year-ago period and 32.7 percent in the first quarter of this financial year, it added.
The earnings boom in the BFSI segment has come at a time when non-financial companies have seen their profits taking a hit from higher interest rates and commodity prices, pointed out the report.
The biggest gains came to banks, which reported a 35.8 percent YoY growth rate in their combined net profit in Q2 FY23. In comparison, the combined adjusted net profit of the non-BFSI companies in the sample was down 20 percent YoY in Q2 FY23 due to higher operating and finance costs, stated the report.
As per the market daily, the BFSI companies’ gross interest income was up 14.9 percent YoY in Q2 FY23, while their interest expense grew 13.6 percent, leading to an expansion of their net interest margin. This has been the trend during the post-pandemic period.