Growth in PSB staff costs higher than private peers

Public sector banks' (PSBs) growth in staff cost vis-a-vis
private banks was significantly higher during 2009-10. However, the
staff cost spent declined for both private and public sector banks
during 2009-10 compared with the previous fiscal.

According to a study on 27 PSBs and 18 private banks, growth in staff
cost in the case of PSBs marginally dipped to 18.7% in 2009-10 from
21.6% a year-ago, whereas the same for private banks significantly
decreased to 10.5% from 25.8%.

Total staff cost of the PSBs increased to Rs 41,048 crore during 2009-
10 from Rs 28,432 crore in 2007-08 and Rs 34,577 crore in 2008-09.
Among the PSBs, Central Bank of India registered highest increase in
growth of staff cost, to 21.3% during the study period from 4.8%. This
can be explained from the bank's performance. While interest income of
the lender increased 15.4% during 2009-10, net profit rose 85.3% to Rs
1,058 crore.

While Andhra Bank's staff cost rose to 32.1% from 22.5%, the same for
Bank Of India went up to Rs 2,296 crore from Rs 1,657 crore in 2007-08.
In 2009-10, SBI had the highest staff cost of Rs 12,754 crore, followed
by PNB (Rs 3,121 crore) and Bank Of Baroda (Rs 2,350 crore).

The staff cost to interest income ratio of PSBs dropped from 13.44% in
2007-08 to 12.66% in 2008-09 and increased thereafter to 13.39% last
fiscal. A steady decline in the ratio was registered by nine PSBs,
including Bank Of Baroda, PNB,Uco Bank and United Bank of India.

In 2009-10, the increase in staff cost of private banks was lower
compared to the PSBs. Among the 18 private sector banks, six, namely
Axis Bank, Bank Of Rajasthan, Dhanlaxmi Bank, IndusInd Bank, J&K Bank
and Karur Vysya Bank showed more than 25% increase in staff costs.

At an aggregate level, the staff cost of the private banks rose from Rs
6,617 crore in 2007-08 to Rs 8,324 crore in 2008-09 and further to Rs
9,200 crore last fiscal. The staff cost of all the private sector
banks' increased in 2009-10, except for ICICI Bank and Kotak Mahindra
Bank, DCB and Catholic Bank.

The staff cost of ICICI Bank steadily decreased from Rs 2,079 crore in
2007-08 to Rs 1,972 crore in 2008-09 and further to Rs 1,926 crore in
2009-10.This can be explained from its performance. The interest income
of ICICI Bank decreased by 17.3% to Rs 25,707...