Of India posts net loss of Rs 3,571 crore for Q4 over bad loans
The bank clocked a profit of Rs 251.79 crore in January-March 201819. In December quarter also, there was a profit of Rs 105.52 crore. Bank of India reported a standalone net loss of Rs 3,571.41 crore for the quarter ended March 31, 2020 due to higher provisions for bad loans.
The bank clocked a profit of Rs 251.79 crore in January-March 2018-19. In December quarter also, there was a profit of Rs 105.52 crore. "Because of higher provisions on bad debts, from Rs 1,503 crore duringQ4 FY19 to Rs 7,316 crore during Q4 FY20, net profit stood at(-) Rs 3,571 crore as against Rs 252 crore during Q4 FY19," Bank of India said in a release.
Income during March quarter 201920 fell to Rs 12,215.78 crore from Rs 12,293.59 crore in the year-ago period, it said in a regulatory filing. The bank's overall provisions for bad loans and contingencies were at Rs 8,141.92 crore for JanuaryMarch 2019-20, significantly higher than Rs 1,897.43 crore in the yearago period.
In 2019-20, the bank had a net loss of Rs 2,956.89 crore as against a loss of Rs 5,546.90 crore in the previous year.
Income during the year however went up at Rs 49,066.33 crore from Rs 45,426.70 crorea year ago. The bank's asset quality remained a concern as gross non performing assets (NPAs) were still higher at 14.78 per cent of gross advances at March-end, 2020 as against 15.84 per cent by the same period a year ago.
In value terms, gross NPAs or bad loans were Rs 61,549.93 crore as against Rs 60,661.12 crore earlier. Net NPAs were 3.88 per cent Rs 14,320.10 crore as against 5.61 per cent Rs 19,118.95 crore.
BOI said it plans to raise up to Rs 16,000 crore through issuance of shares and bonds. It will seek shareholders' approval at its Extraordinary General Meeting, the lender said in a regulatory filing. The bank said it plans to issue fresh equity shares up to an amount of Rs 8,000 crore in such a way that the government's shareholding does not fall below 51 per cent.
It will also seek approval for issuing perpetual debt instruments, including non-convertible debentures (NCDs), for an amount not exceeding Rs 8,000 crore.
"The said set off will help the bank to improve its distributable reserves. The proposal will also put the bank in a better position to achieve its turnaround plans in a time-bound manner,"
State-owned Punjab National Bank NSE 0.57 % (PNB) on Friday reported a standalone net profit of Rs 308 crore for the quarter ended June even as provisions for bad loans doubled.
The country's second largest lender had posted a net profit of Rs 1,018.63 crore during the corresponding AprilJune period of 2019-20.
While the figures show a drop of 70 per cent, the bank in a regulatory filing said the results are not comparable as it merged Oriental Bank of Commerce and United Bank of India with itself effective April 1, 2020.
"Operating profit of the bank grew by 2.5 per cent on a YOY basis to Rs 5,280 crore in the first quarter of FY'21," the bank said in a separate statement. Total income rose to Rs
24,292.80 crore during the June quarter of 2020-21, as against Rs 15,161.74 crore in the same period of the previous fiscal.
On the assets front, the lender's gross non-performing assets ( NPAs) fell to 14.11 per cent of gross advances at the end of June 2020, as against 16.49 per cent at the end of June 2019. Net NPAs declined to 5.39 per cent as against 7.17 per cent earlier. However, provisions for bad loans more than doubled to Rs 4,836.40 crore from Rs 2,147.13 crore. Provision Coverage Ratio (PCR) improved to 80.75 per cent from 70.37 per cent.
During the quarter, the bank availed dispensation for deferment of provision in respect of frauds amounting to Rs 1,693.68 crore as per RBI guidelines, it added. State-owned Punjab National Bank (PNB) Monday said about 5-6% of its loan book may be eligible for a one-time debt restructuring. The bank hopes to get a clearer picture by September end, when guidelines from the K.V. Kamath committee on debt recast are expected to be released.
The country’s second-largest public sector lender on Friday announced a net profit of Rs308 crore for the June quarter, against Rs 1,018 crore a year ago. In the March quarter, the bank had posted a net loss of Rs 697.20 crore. Total income during the quarter stood at Rs24,292 crore, against Rs 15,161 crore a year ago. Capital adequacy ratio under Basel III norms stood at 12.63% compared to 9.77% a year earlier.
PNB expects good credit growth from micro, small and medium enterprises, as well as retail customers in the rest of the current financial year, managing director and chief executive officer S.S. Mallikarjuna Rao said in a post-earnings virtual briefing on Monday. “As far as (demand from) corporates are concerned, it will depend on new investment. Today, bankers have liquidity and are ready to invest if opportunities arise. The
S. S. Mallikarjuna Rao, CEO, PNB
situation may change from October onwards, barring sectors such as tourism and aviation that may take longer to come back. Investments are expected to happen in the road sector. We can also see some industries enhancing their capacity utilization where additional funding would be required. There could be demand from the automobile and textile sector," he said. Moody’s downgrades SBI’s baseline oody's Investors Service said on Tuesday it has downgraded top lender State Bank of India NSE -0.22%’s (SBI) Baseline Credit Assessment (BCA) and adjusted it to ba2 from ba1, reflecting the rating agency’s view that the bank's asset quality and profitability will deteriorate. Consequently, the ratings agency also downgraded SBI's foreign currency preferred stock noncumulative MTN program rating to (P)B2 from (P)B1, and the rating of the preferred stock non-cumulative (Basel III compliant Additional Tier 1 securities) bond issued out of its DIFC branch toB2(hyb) from B1(hyb).Meanwhile, it affirmed the long-term local and foreign currency deposit ratings of SBI at Baa3, pointing that deposit ratings of SBI are at the same level as India's Baa3
Msovereign rating.
Moody’s pointed that the economic shock from the coronavirus pandemic will exacerbate an already material slowdown in India's economic growth, weakening borrowers' credit profiles and hurting Indian banks' asset quality. Prolonged financial stress among rural households, weak job creation and a credit crunch among nonbank financial companies will lead to a rise in non-performing loans, delaying the ongoing clean-up of bank's balance sheet over the past two years, it said.
“The resultant weakening in internal capital generation will reverse improvements in the bank's financial metrics achieved over the past two years,” Moody’s said referring to its view that the bank's asset quality and profitability will deteriorate. “Prior to the review for downgrade, Moody's had expected that improvements to SBI's asset quality and profitability would result in financial metrics in line with global peers with ba1 BCAs,” it added. SBI's asset quality improved in the quarter ended June, with its gross non-performing loan ratio declining to 5.4 per cent from 7.5 per cent a year ago. However, Moody’s believes the ratio is potentially understated because it does not include loans on which the bank has
granted payment deferrals.
As of June 2020, about 9.5 per cent of SBI's loans were under a repayment moratorium until the end of August.After the loan deferment period ends, the RBI has permitted Indian banks to restructure loans to borrowers whose earnings and businesses have been impacted by the pandemic, and in line with the trend for other Indian peers, Moody's expects SBI to restructure loans. “However, uncertainty around the length and depth of India's economic slowdown make it difficult to estimate what portion of restructured loans will eventually turn into nonperforming loans,” the ratings agency said expressing its concerns.