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A mid-sized private bank from south India earned a record profit of about Rs 1,386 crore in the September quarter, up 45% from a year ago. The number I would underline isn't the profit. It's that the bank earned less on its loans than a year ago, & its margin still went up, to 3.32% from 3.06%.
The yield on its loans fell to 8.70% from 8.99%. But what it pays for its money, its cost of funds, fell faster, to 5.21% from 5.61%. So the gap between the two widened to about 3.49 percentage points from 3.38, by our calculation. In the same season, ICICI Bank's margin slipped to 4.18% from 4.30% a year ago, & HDFC Bank's to 3.16% from 3.26% in the June quarter. That contrast is the part worth understanding.
The company I am referring to is . . .