2nd wave of Covid slows profit growth rate of financial cos

Mumbai, Aug 19 (IANS) The second wave of Covid-19 has somewhat impacted the growth rate of net profits of financial companies in April-June in comparison to the growth in the preceding quarter.

According data in the Reserve Bank of India’s (RBI) Bulletin for August, the growth in net profit of financial companies rose was 40.5 per cent in the April-June quarter, compared to the 594.4 per cent growth in January-March quarter.

Among listed financial companies — 390 companies — representing 88.5 per cent of market capitalisation of all listed financial sector companies in India – net sales, which primarily includes interest income, increased marginally but other income, which includes fees, commissions and profit and loss from transactions in securities, saved the blushes and recorded a sharp rise relative to a year ago.

Expenditure growth remained subdued, reflecting the easy cost conditions in the economy as a result of the Reserve Bank’s measures to expand liquidity and ease financial conditions.

“Taken together, these factors helped financial companies to post substantial growth in operating profits, literally snatched from the virulence of the second wave,” it said.

Furthermore, a fall in provisioning costs contributed to the sharp growth in net profits posted by these companies.