It’s a rare occurrence for another Indian company to surpass Reliance in terms of profitability. However, media reports have indicated that during the June quarter of 2023 (Q1FY24), the State Bank of India (SBI) achieved higher profits than Reliance Industries.

In Q1FY24, Reliance reported net profits of Rs 16,011 crore, whereas SBI disclosed net profits of Rs 18,537 crore. This represents a significant 15.8% increase in profits for SBI compared to Reliance Industries. This trend extends beyond the most recent quarter; even when considering the cumulative results of the four rolling quarters spanning from September 2022 to June 2023, SBI’s net profits of Rs 66,860 crore stand 3.25% higher than Reliance Industries’ Rs 64,758 crore.

Of particular interest is that this marks the first time in over a decade that SBI has outperformed Reliance Industries in combined profits over four rolling quarters. The last instance was back in the fiscal year 2011-12 when SBI reported a trailing 12-month net profit of Rs 18,810 crore against Reliance’s consolidated net profit of Rs 18,588 crore.

Throughout history, Reliance has contended with public sector oil and gas giants like Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation for the position of India’s most profitable company.

In the April-June period of 2012-13, Indian Oil exceeded Reliance, securing the top spot on the profit league table. Prior to this, ONGC held the lead until the October-December quarter of FY12.

Over the past 3-4 years, PSU banks faced challenges including sluggish top-line growth, elevated levels of non-performing assets (NPAs), and insufficient capital adequacy. However, substantial changes have unfolded in recent years.

Multiple rounds of capital infusion by the government have bolstered the capital reserves of public sector banks. A strategic emphasis on retail operations has enhanced the financial performance of these banks. SBI, in particular, has consistently showcased growth in net interest income (NII), a pivotal metric in the banking sector.

Furthermore, net interest margins (NIM) have substantially expanded across most of the PSBs in recent years. Additionally, concerted provisioning efforts and a dedicated focus on recovering bad loans have led to a reduction in gross NPAs, resulting in average net NPA levels falling below 1%. This accomplishment has also translated to a notable reduction in quarterly provisions, significantly reinforcing the provisions coverage ratio.

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