The piling up of bad loans dragged three out of four public sector banks that announced results on Tuesday into heavy-loss territory even as the Reserve Bank of India Governor recently announced the clean-up of bank balance sheets. While Central Bank of India, Allahabad Bank and Dena Bank reported losses for the quarter ended December 31, Punjab National Bank reported a meagre profit of Rs 51 crore despite a tax write-back of Rs 909 crore.
The sharp rise in gross non-performing loans for all the lenders comes after the RBI, in its asset quality review, identified many accounts that banks were asked to classify as non-performing. Banks have to make the entire provisioning for the accounts identified by RBI in the third and fourth quarter – that translates into a 15-20 per cent provisioning of the loan outstanding for sub-standard assets, as compared to 5 per cent for standard assets.
Here’s a lowdown of the results announced by the banks on Tuesday.
Central Bank of India: Rs 836-crore loss
Mumbai-based Central Bank of India posted a whopping Rs 836-crore loss for the quarter ended December 31 as compared to a Rs 137-crore profit in the same period of the previous financial year.
Gross non-performing assets (NPAs) of the state-run bank rose to Rs 17,564 crore, which is 8.95 per cent of loans, up from Rs 11,796 crore (6.2 per cent) reported at the end of December 2014. During the quarter, additions to gross NPA were at over Rs 4,000 crore. Total provisions more than doubled to Rs 1,499 crore during the third quarter as compared to Rs 699 crore during the corresponding period of the previous fiscal. The bank said the additional provisioning requirement due to RBI directions was about Rs 491 crore.
PNB: Net plunges 93%
A higher provisioning for bad assets and contingencies dragged down state-owned Punjab National Bank’s net profit by 93 per cent to Rs 51 crore for the three months to December.
The bank had reported a net profit of Rs 774.6 crore in the corresponding quarter last fiscal.
“The industry is going through very tough times and PNB has been one of the major lenders. Obviously the impact is felt on the bank, which is very much visible on its books,” Chief Executive Officer Usha Ananthasubramanian told reporters.
PNB increased its provisioning and contingencies allocation to Rs 3,775.5 crore for the October-December quarter of 2015-16, a steep increase from Rs 1,467.8 crore parked aside in the same quarter a year ago.
The bank’s asset quality deteriorated further as gross NPAs or bad loans hit 8.5 per cent of the gross advances during third quarter of current fiscal, as against 5.9 per cent a year ago. Likewise, net NPAs rose to 5.9 per cent of the net advances as of December quarter of 2015-16, up from 3.8 per cent in the previous year’s third quarter. “The increase in NPAs is on account of the bank’s exercises as part of RBI’s asset quality review over the last two quarters of the current financial year. The bank is undertaking the same over the time-rame stipulated by the RBI,” PNB said in a statement.
However, income of the bank rose by 7.6 per cent to Rs 13,891.2 crore during the third quarter of current fiscal as against Rs 12,904.9 crore a year earlier.
Allahabad Bank: Loss at Rs 486 crore
Public sector Allahabad Bank reported a loss of Rs 486.14 crore for the third quarter ended December 31, due to higher provisioning against bad loans. The bank had earned a net profit of Rs 164.11 crore in the same quarter last year.
Total income also declined to Rs 5,030.19 crore during the quarter from Rs 5,386.79 crore in the previous fiscal.
Gross NPAs as a percentage to total advances rose to 6.40 per cent from 5.46 per cent in the same quarter year ago. Net NPAs went up to 4.23 per cent from 3.89 per cent at the end of December 2014. Total provisions, excluding for income tax, nearly doubled to Rs 1,208.15 crore as against Rs 643.66 crore in the year-ago period.
Dena Bank: Rs 663-crore loss
State-run lender Dena Bank reported a Rs 663-crore loss for the quarter ended December 31, 2016 as compared to a Rs 77-crore profit reported during the same period of previous year on the back of sharp rise in provisioning requirement for bad loans. Gross non-performing assets of the lender zoomed to Rs 7,916 crore, up Rs 2634 crore as compared to the previous quarter. The gross NPA ratio was at 9.9 per cent as compared to 5.6 per cent a year ago, while net NPA was 6.7 per cent as compared to 3.9 per cent.
Dena Bank said the additional provisioning requirement was Rs 234 crore during the period under review, which is 56 per cent of the total provisioning requirement. The remaining amount will be provided in the January-March quarter. Total provisioning of the bank was Rs 966 crore during the quarter, which is 300 per cent more than the amount provided during the same period of the previous financial year.
Ashwani Kumar, chairman and managing director, Dena Bank said the loss was due to higher provisioning requirement for bad loans. “We have seen fresh slippages of around Rs 2500 crore during the quarter,” he said during the post earnings press conference. The provision coverage ratio of the bank was at 49 per cent.
“In spite of the large interest reversal, bank has been able to maintain its net interest margin at 2.18 per cent for the nine months ended December 2015,” the bank said. With PTI inputs
