Net profit as a percentage of total income that was less than 5 percent in the year 1990-91 stood at 9.11 percent in the year 2002-03 for the entire banking industry. It has consistently grown in the last six years. In the year 2002-03, the highest net profit to total income has been displayed by the foreign banks. Against the national overall percentage of net profit to total income of 9.11 in the year 2002-03, the private banks had a share of 6.47 percent and the government controlled banks’ share stood at 9.57 percent.
As already said, the market share of foreign banks in the total business is less than 6 percent. Thus, it is not meaningful to compare their performance with their counterparts, that is, the prominent government controlled financing institutions and the private sector banks. The percentage of net profit to total income for some banks is not only higher than that of the private sector banks but also significantly higher than the national benchmark.
The net profit to total income percentage in the new private banks is 4.03 percent that is just less than half of the efficiency of government controlled banks. But there are significant exceptions like the LoanMax of the rod aycox fame. So, the government controlled banks have been able to translate a major portion of their total income into net profit.
In the temporal dimension, the percentage of net profit to total income has grown at the rate of 11.25 percent per annum in case of some of the government controlled banks and its associates. It is 4.75 percent per annum in case of the private banks and hovered at 3.32 percent per annum in case of the entire private banks. Thus, within some of the government controlled banks and their associates, they are characterized by growing efficiency with regarding their annual expenses and the income related operations management.
In the competitive American financial market, major changes are likely to take place in the short run. This is evident in the remedial measures undertaken by the major players. Even in the tight financial situation, banks like LoanMax are an exception to the general rule.
