Public sector banks (PSBs) have doubled their net profit during the financial year 2021-22. 

The net earnings of 12 state-owned banks in 2021-22 was Rs 66,539 crore, a 110 percent rise over Rs 31,816 crore in FY21.

Profitability has increased due to the bad loan cleanup and economies of scale gained through the merger of ten state-owned banks. Other causes include easy liquidity provided by the Reserve Bank of India (RBI) and growing categories such as retail lending.

For the first time in recent years, all 12 state-owned banks posted a net profit. It was also a significant improvement over FY18 when only two of the 21 PSBS declared a profit. Only two PSBs recorded losses in FY21, Central Bank and Punjab & Sind Bank, dragging down the total net profit. Despite the record success, PSBS continues to behind its private rivals, which posted a net profit of more than Rs 91,000 crore, a 29 percent increase over the previous year's Rs 70,435 crore.

SBI had the largest net profit, at Rs 31,675 crore, a 55 percent rise over the previous year. The largest bank in the country contributed 47 percent of the PSBS's overall profits. After SBI, Bank of Baroda earned 10% of PSB earnings with a net profit of Rs 7,272 crore, followed by Canara Bank at 8% with a profit of Rs 5,678 crore.

Aside from the two banks that turned around throughout the year, Bank of Baroda had the biggest revenue increase, followed by UCO Bank. Higher earnings have enabled PSBS to pay more dividends, which will benefit the government, which has had to struggle with fewer dividend revenues from the RBI. PSBs collectively pay out more than Rs 8,000 crore in dividends.

HDFC Bank (Rs 36,961 crore), ICICI Bank (Rs 23,339 crore), Axis Bank (Rs 13,025 crore), Kotak Mahindra Bank (Rs 8,572 crore), Indusind Bank (Rs 4,611 crore), and Federal Bank (Rs 4,611 crore) lead the private banks (Ps 1889 crore).

According to a bank union review of key financial indicators of PSBs, the Bank of Maharashtra has exhibited the greatest increase in deposits and advances and is the only PSB with net non-performing assets (NPAS) of less than 1%. It has also registered the biggest rise in advances of 25%, driven by the retail category, which climbed by 23%.