 "NPA provisioning drowns banks' profits")
A steep rise in provisions for bad loans has made a heavy dent in the bottom-line of banks.
While State Bank of India (SBI), Union Bank and Indian Bank reported large fall in their profit for the quarter ended December 2015 (Q3), Bank of India (BoI) and Oriental Bank of Commerce booked losses. For BoI, this is the second-loss making quarter in a row.
Only Jammu & Kashmir Bank posted a 12.5 per cent rise in net profit.
Bankers and analysts said along with provisions for non-performing loans (NPAs), reversal of part of interest income on NPAs and income forgone because of base rate cut also hit the profitability.
SBI's net profit declined by 61.67 per cent, from Rs 2,910 crore in Q3 of FY15 to Rs 1,115 crore in FY16.
Arundhati Bhattacharya, its chairman, said the bank had recognised the provisioning impact in line with Reserve Bank of India's Asset Quality Review according to the agreed time-frame.
"Slippages in the fourth quarter of FY16 are expected to be of a similar order. Actual numbers would depend on the quality of restructuring underway for some accounts," Bhattacharya said.
SBI's net interest income (NII) declined by 1.24 per cent from Rs 13,777 crore in Q3 of FY15 to Rs 13,606 crore in Q3 of FY16, primarily because of the reduction of 70 basis points in base rate.
Its non-interest income comprising gains from treasury and fees increased by 17.94 per cent from Rs 5,238 crore in Q3 of FY15 to Rs 6,178 crore in Q3 of FY16.
SBI's capital adequacy was 12.45 per cent at the end of December 2015.
Its share closed three per cent down at Rs 154 per share on the BSE.
Bank of India has posted net loss for the December 2015 quarter of Rs 1,506 crore as compared to a net profit of Rs 173 crore for Q3 of FY15.
Total provisions (other than taxes) increased from Rs 3,238 crore to Rs 3,604 crore, on sequential quarter basis.
The bank had posted net loss in Q2 of Rs 1,126 crore. This was before the Reserve Bank of India's fiat to recognise weak loans early and provide for them sooner.
The net interest income for Q3 of FY16 declined to Rs 2,605 crore from Rs 2,780 crore of Q3 of FY15.
The capital adequacy of was 11.28 per cent with Tier-I of 7.88 per cent at end of December 2015. BoI stock was down six per cent at Rs 85 per share on BSE.
Another Mumbai-based Union Bank of India posted 74.2 per cent drop in net profit at Rs 78 crore as against Rs 302 crore in Q3 of FY15 on fall in net interest income and rise in provisions for bad loans.
The net interest income dipped by 5.8 per cent to Rs 1, 997 crore from Rs 2,120 crore a year ago. Its non interest income showed just 1.5 per cent growth of Rs 892 crore.
Showing effect of the RBI's directive for accelerated recognition of bad loans, the gross NPAs rose to 7.05 per cent (Rs 18,485 crore) in December 2015 from 5.08 per cent (Rs 12, 596 crore) a year ago. Over 50 per cent of slippages were on account of RBI's fiat, it chairman and managing director Arun Tiwari said.
The capital adequacy ratio was 10.3 per cent with Tier-I of 7.7 per cent. The bank has permission to raise equity capital of over Rs 2,000 crore. Its stock was down by three per cent to Rs 118.
Delhi-based Oriental Bank of Commerce reported a net loss of Rs 424.6 crore as against net profit of Rs 19.56 crore in the same quarter of the previous year. The burden of NPAs grew on account of fresh bad debts, led by the steel sector and higher provisioning for non-performing assets for them during the quarter. Its stock closed 11 per cent down at 85 per share.
Chennai-based state lender Indian Bank posted a net profit of Rs 42.3 crore, down from Rs 277.52 crore for the quarter ended December 31, 2014. Its share was down six per cent to Rs 80.
Srinagar-based Jammu & Kashmir Bank posted 12.5 per cent rise in net profit for Q3 at Rs 117.68 crore as against Rs 104.64 crore in Q3 of FY15. Its share closed flat at Rs 69 per share.
While State Bank of India (SBI), Union Bank and Indian Bank reported large fall in their profit for the quarter ended December 2015 (Q3), Bank of India (BoI) and Oriental Bank of Commerce booked losses. For BoI, this is the second-loss making quarter in a row.
Only Jammu & Kashmir Bank posted a 12.5 per cent rise in net profit.
Bankers and analysts said along with provisions for non-performing loans (NPAs), reversal of part of interest income on NPAs and income forgone because of base rate cut also hit the profitability.
SBI's net profit declined by 61.67 per cent, from Rs 2,910 crore in Q3 of FY15 to Rs 1,115 crore in FY16.
Arundhati Bhattacharya, its chairman, said the bank had recognised the provisioning impact in line with Reserve Bank of India's Asset Quality Review according to the agreed time-frame.
"Slippages in the fourth quarter of FY16 are expected to be of a similar order. Actual numbers would depend on the quality of restructuring underway for some accounts," Bhattacharya said.
SBI's net interest income (NII) declined by 1.24 per cent from Rs 13,777 crore in Q3 of FY15 to Rs 13,606 crore in Q3 of FY16, primarily because of the reduction of 70 basis points in base rate.
Its non-interest income comprising gains from treasury and fees increased by 17.94 per cent from Rs 5,238 crore in Q3 of FY15 to Rs 6,178 crore in Q3 of FY16.
SBI's capital adequacy was 12.45 per cent at the end of December 2015.
Its share closed three per cent down at Rs 154 per share on the BSE.
Bank of India has posted net loss for the December 2015 quarter of Rs 1,506 crore as compared to a net profit of Rs 173 crore for Q3 of FY15.
Total provisions (other than taxes) increased from Rs 3,238 crore to Rs 3,604 crore, on sequential quarter basis.
The bank had posted net loss in Q2 of Rs 1,126 crore. This was before the Reserve Bank of India's fiat to recognise weak loans early and provide for them sooner.
The net interest income for Q3 of FY16 declined to Rs 2,605 crore from Rs 2,780 crore of Q3 of FY15.
The capital adequacy of was 11.28 per cent with Tier-I of 7.88 per cent at end of December 2015. BoI stock was down six per cent at Rs 85 per share on BSE.
Another Mumbai-based Union Bank of India posted 74.2 per cent drop in net profit at Rs 78 crore as against Rs 302 crore in Q3 of FY15 on fall in net interest income and rise in provisions for bad loans.
The net interest income dipped by 5.8 per cent to Rs 1, 997 crore from Rs 2,120 crore a year ago. Its non interest income showed just 1.5 per cent growth of Rs 892 crore.
Showing effect of the RBI's directive for accelerated recognition of bad loans, the gross NPAs rose to 7.05 per cent (Rs 18,485 crore) in December 2015 from 5.08 per cent (Rs 12, 596 crore) a year ago. Over 50 per cent of slippages were on account of RBI's fiat, it chairman and managing director Arun Tiwari said.
The capital adequacy ratio was 10.3 per cent with Tier-I of 7.7 per cent. The bank has permission to raise equity capital of over Rs 2,000 crore. Its stock was down by three per cent to Rs 118.
Delhi-based Oriental Bank of Commerce reported a net loss of Rs 424.6 crore as against net profit of Rs 19.56 crore in the same quarter of the previous year. The burden of NPAs grew on account of fresh bad debts, led by the steel sector and higher provisioning for non-performing assets for them during the quarter. Its stock closed 11 per cent down at 85 per share.
Chennai-based state lender Indian Bank posted a net profit of Rs 42.3 crore, down from Rs 277.52 crore for the quarter ended December 31, 2014. Its share was down six per cent to Rs 80.
Srinagar-based Jammu & Kashmir Bank posted 12.5 per cent rise in net profit for Q3 at Rs 117.68 crore as against Rs 104.64 crore in Q3 of FY15. Its share closed flat at Rs 69 per share.