Key Banking Metrics: NIM, CASA and GNPA Scorecard

After Digital Banking & the Fintech Revolution in India, the next question is how to read the banks behind those products and partnerships. Key banking metrics give an interview-ready scorecard for judging a bank’s profitability, funding strength, asset quality, efficiency, and return profile using FY24 benchmarks from major Indian banks.

Banking Metrics Scorecard

Banks require a separate set of metrics due to their unique business model - they intermediate between depositors and borrowers, making traditional profitability ratios insufficient. The scorecard below compares HDFC Bank, SBI, and Kotak Bank on FY24 metrics and benchmarks.

Source: Company Quarterly Reports, HDFC Bank/SBI/Kotak Mahindra Bank FY2024.

Profitability: NIM

NIM (Net Interest Margin) is calculated as (Interest Income - Interest Expense) / Avg Earning Assets. Higher NIM = better spread between lending and deposit rates.

In FY24, HDFC Bank reported 4.3%, SBI reported 3.3%, and Kotak Bank reported 5.0%. The benchmark is Private: 3.5-4.5%; PSU: 2.5-3.2%.

Funding Strength: CASA Ratio

CASA Ratio means Current Account + Savings Account deposits as a share of total deposits. The formula is (CA + SA Deposits) / Total Deposits.

Higher CASA = cheaper funding; CASA deposits are near-zero cost. HDFC Bank reported 38%, SBI reported 43%, and Kotak Bank reported 49%, with >40% = strong and <30% = expensive funding.

Asset Quality: GNPA, NNPA, PCR and Credit Cost

GNPA Ratio is Gross NPA / Gross Advances. NPA means Non-Performing Asset - loan overdue >90 days; stressed asset. For FY24, HDFC Bank reported 1.24%, SBI reported 2.24%, and Kotak Bank reported 1.73%, with Private <2% and PSU <5% = healthy.

NNPA Ratio is Net NPA / Net Advances. It is net of provisions and is a cleaner measure of actual credit quality. HDFC Bank reported 0.33%, SBI reported 0.57%, and Kotak Bank reported 0.34%, with <1% = strong and <0.5% = excellent.

PCR (Provision Coverage) is Provisions / Gross NPA. Provision Coverage Ratio - higher = more conservative provisioning. HDFC Bank reported 74%, SBI reported 91%, and Kotak Bank reported 73%, with >70% = prudent and >80% = very safe.

Credit Cost is Provisions / Avg Loan Book. It is the annual credit loss rate and a key driver of net profit for banks. HDFC Bank reported 0.4%, SBI reported 0.3%, and Kotak Bank reported 0.5%, with normalised: 0.5-1.0% and <0.5% = benign cycle.

Return Profile: ROA and ROE

ROA is Net Profit / Avg Total Assets. HDFC Bank reported 1.9%, SBI reported 1.0%, and Kotak Bank reported 2.2%, with Private >1.5% and PSU >0.8%.

ROE is Net Profit / Avg Shareholders' Equity. HDFC Bank reported 17.0%, SBI reported 18.9%, and Kotak Bank reported 14.5%, with >15% for private and >12% for PSUs.

Efficiency: C/I Ratio

C/I Ratio (Cost-to-Income) is Operating Expenses / Net Revenue. Lower = better; <45% = efficient; >60% = concern.

In FY24, HDFC Bank reported 42%, SBI reported 55%, and Kotak Bank reported 46%. This makes the C/I Ratio a useful efficiency check alongside profitability, funding, asset quality, and return metrics.

How to Use the Scorecard

Always quote a range, not a single number - it signals you understand that metrics vary by bank type (PSU vs private), size, and credit cycle. Anchoring to HDFC Bank and SBI as reference points is always well-received.

Conclusion

Key banking metrics work best as a scorecard: NIM for profitability, CASA for funding strength, GNPA and NNPA for asset quality, PCR and credit cost for risk prudence, ROA and ROE for returns, and C/I Ratio for efficiency.