Bad debt lower, but problem intact
New Delhi, Nov. 8: Bank of Baroda reported a jump of 73.2 per cent in its net profit to Rs 736.68 crore in the second quarter ended September 30.
The bank had posted a net profit of Rs 425.38 crore in the corresponding quarter of the previous fiscal.
Its total income rose to Rs 22,097.91 crore, compared with Rs 13,429.95 crore a year ago, the bank said.
The lender improved on its bad assets, with the gross non-performing
New Delhi, Nov. 8: Improving asset quality and better margins helped the crippled IDBI Bank to marginally narrow its net losses at Rs 3,459 crore in the September quarter, even though the the lender chose to make accelerated provisions for stressed assets.
The LIC-controlled bank, which has been under the RBI’s prompt corrective action for more than a year, had reported a net loss of Rs assets (NPAs) coming down to
10.25 per cent (Rs 69,968.95 crore) of the gross advances, compared with
11.78 per cent (Rs 55,121.37 crore) in the year-ago period. Net NPAs fell to
3.91 per cent (Rs 24,894.38 crore) from
4.86 per cent (Rs 21,059.22 crore). However, the bank raised the provisions for bad loans and contingencies to Rs 4,209.16 crore for the quarter, from Rs 2,429.54 crore a year ago.
3,602 crore in the year-ago period. The management attributed the losses to “accelerated provisions to the tune of Rs 3,425 crore, helping it take the provision coverage ratio to
91.25 from 68.72 from a year ago.” Managing Director and Chief Executive Rakesh Sharma told reporters that total provisions during the quarter stood at Rs 4,453 crore.
New Delhi, Nov. 8: Allahabad Bank reported widening of net loss to Rs 2,103.19 crore for the September quarter 2019-20 due to higher provision for bad loans.
The bank posted a loss of Rs 1,816.19 crore during the year-ago period. It clocked a profit of Rs 128 crore. Total income rose to Rs 4,725.23 crore from Rs 4,492.23 crore in same period last fiscal, the company said.
Gross non-performing assets (NPAs) or bad loans increased to 19.05 per cent (Rs
31,467.53 crore) of the gross advances from
17.53 per cent (Rs 27,236.19 crore) by the same period of 2018. Net NPAs came down to 5.98 per cent (Rs 8,502.09 crore) from 7.96 per cent (Rs 11,082.74 crore) in the year-ago period, it said.
The provisioning for bad loans spiked to Rs 2,721.97 crore in the second quarter, from Rs 1,991.88 crore in the year-ago period.
During the quarter, the bank made additional provision of Rs 1,982.41 crore over and above the provisions required to be made in terms of prudential norms issued by the RBI, to ensure compliance with the PCA norms of the net non-performing advances, it added.
Indian banks wrote off more than $30 billion worth of bad debt in the year to June 30, helping to lower stressed loans on their books by 8.5 per cent, according to central bank data reviewed by Reuters.
The write-offs illustrate the urgent problem of bad loans as borrowers struggle to service, let alone pay-off, their debt in a stuttering economy.
As of June 30, total stressed assets on the books of Indian banks were at Rs
9,768.47 billion (137.50 billion), down from Rs
10,672.29 billion ($150.22 billion) a year ago, according to central bank data reviewed by Reuters.
A large part of this reduction reflected the write-off by banks of loans worth Rs
2,165.08 billion ($30.64 billion) in the last financial year, the data obtained by Reuters via a right to information filing showed.
And in the period ending June 30 — the first quarter of the current financial year — write-offs amounted to Rs 445.77 billion ($6.31 billion), the data showed.
Without the write-offs and with the incremental bad debt the pile may have ballooned to nearly $175 billion by the end of June. Moreover, analysts warn the shaky shadow banking industry could worsen an already harsh climate for lenders.
Soaring bad debt levels, especially on the books of state-run lenders, have choked the Indian banking system and crippled its ability to generate fresh lending and revive economic growth that has slumped to a sixyear low. The frail growth has put the brakes on sectors like autos and real estate, causing fresh heartburn for banks.
Although the Indian government and central bank has said the worst of India’s bad loans crisis may be over, many analysts and market insiders remain skeptical given fresh cracks in the large shadow banking industry following the collapse of infrastructure lending behemoth, IL&FS late last year.
“Because of the new stress that building up in realestate, autos, non-banking financial companies, and other sectors we expect that the worst is not over and there may be an increase in the stressed assets pile,” said Karthik Srinivasan, Head of financial sector ratings at rating agency Icra, the Indian unit of Moody’s.
“The slower than expected resolution process also means that there is unlikely to be any reduction in the numbers,” he said.
A Credit Suisse report from earlier this year also warned that while banks NPAs had declined from 11.7 per cent in March 2018 to 9.6 per cent in the first quarter of this financial year, the stressed loans are expected to top 12 per cent in the coming quarters.
As of June 30, total outstanding dues on accounts where sums to banks have remained unpaid for between 60-90 days stood at Rs 732.2 billion ($10.4 billion), while overdues ranging between 30-60 days were at Rs 618.79 billion ($8.8 billion). These accounts will only be classified as nonperforming assets after the 90-day period.