Only five of the 27 public sector banks have been able to meet the 2005-06 net profit targets set by their boards in the statements of intent signed with the government at the beginning of the year.
The five banks are Indian Overseas Bank, Indian Bank, Canara Bank, Punjab & Sind Bank, and State Bank of Hyderabad.
IOB has posted a net profit of Rs 783 crore against a target of Rs 740 crore; P&S, Rs 108 crore (Rs 40 crore); Indian Bank, Rs 505 crore (Rs 470 crore); Canara Bank, Rs 1,343 crore (Rs 1,300 crore); and SBH, Rs 427 crore (Rs 400 crore).
Finance Minister P Chidambaram will meet the brass of the public sector banks on Friday to analyse the performance of the CEOs.
This performance appraisal of bank CEOs is crucial as the state-run banks account for three-fourths of the banking industry. Besides, the bank chiefs are set to get performance-related bonuses.
Three of the 22 banks which have been way off their net profit targets are Central Bank (Rs 257 crore against Rs 650 crore), Uco Bank (Rs 197 crore against Rs 397 crore), and Vijaya Bank (Rs 127 crore against Rs 440 crore). Punjab National Bank, which has posted a net profit of Rs 1,439 crore, has also fallen short of its target by over Rs 200 crore.
Banks enter into statements of intent with the finance ministry on 16 major performance parameters including deposits, advances, net profit, return on assets, return on net worth, earning per share, capital adequacy ratio, net interest margin, cost income ratio, non-performing assets, and advances to agriculture, small-scale industries and other priority sectors.
The targets are set in consultation with the boards of the banks. IOB is the only bank which has met all 16 targets, while Indian Bank and P&S have hit 15 each.
Indian Bank fell short on CAR, and P&S on priority sector lending. Canara Bank, SBH, and Bank of Baroda have met 11 of the 16 targets. BoB has missed the net profit target and, along with Canara, fallen short of the target for net NPA.
Among other public sector banks, Allahabad, Dena, Union, and State Bank of India have achieved the target on eight of the 16 performance parameters; Andhra Bank, Bank of Maharashtra, and P&B, seven parameters; Bank of India, six; Corporation Bank, Oriental Bank of Commerce, Syndicate, and Uco, five each; State Banks of Bikaner & Jaipur, Indore, Mysore, and Patiala, and United Bank, four each; Central Bank and State Bank of Travancore, three each; and Vijaya Bank and State Bank of Saurashtra, one each.
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