Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
The slowdown in credit growth and a slump in yields on loans due to low interest rates, continue to bleed core earnings of banks, Business Standard reported on Saturday. The pre-provisioning profit or core earnings were down 1.5% YoY in the second quarter, as compared to the 10% YoY growth in the first quarter this financial year.
Similarly, gross interest income declined for a second consecutive quarter in FY22. The combined interest expenses of banks were down 6.2% YoY in the second quarter of FY22, while bad loan provisioning were down by 34%. Provisioning was at the lowest in at least five years, at around Rs 34,000 crore.
However, Banks managed to post an all time high quarterly net profits in July to September, due to the declining interest costs and lower provisioning for bad loans.
The 28 listed banks have declared their results in the July to September and had reported record quarterly net profits of Rs 39,463 crore in the second quarter, which increased by 48% YoY from Rs 26,844 crore a year ago.
Credit growth to increase in the second half
According to JM Financial institutional equity, earnings growth for banks came largely on suppression of interest on deposits and write back of past provisioning of bad loans. It added that core earnings were under pressure, owing to the low single digit growth in overall credit and downward pressure on yields or interest on loans.
For banks it may be tough to maintain the current momentum in earnings in forth coming quarters, unless credit growth picks up momentum or interest on loan rises. In the last couple of months, banks are also facing a potential increase in their cost of funds, due to the hardening of yields on government bonds.
However, many analysts expect a pick up in credit growth, especially in retail, in the second half of this financial year.