NPA provisioning effect: Union Bank, UCO in red; PNB net sees rise in Q2

The provision coverage ratio (PCR) stood at 56.06% at the end of September 2017

Weighed down by provisions for bad loans, bottom-line of three public lenders —  Punjab National Bank (PNB), Union Bank of India and UCO Bank — remained under pressure in the second quarter ended September 2017 (Q2FY18). While PNB reported a marginal rise in net profit, Union Bank and UCO Bank were in red. It was the first ever quarterly loss for Union Bank of India.

PNB, the Delhi-based lender, posted a 2.2 per cent rise in net profit to Rs 561 crore for the September quarter as it trimmed bad loans and contained slippages. It reported a net profit of Rs 549 crore in the same quarter of the last financial year.

The bank’s provisions for gross non-performing assets (NPAs) rose to Rs 2,693.78 crore for the quarter under review, as against Rs 1,954.13 crore in the year-ago period.

The bank’s gross NPAs as a proportion of gross advances came down to 13.31 per cent (Rs 57,630.11 crore) at the end of September, from 13.63 per cent (Rs 56,465.63 crore) a year ago. “Our fresh slippages have considerably gone down by more than Rs 3,000 crore during this quarter,” PNB Managing Director & Chief Executive Officer Sunil Mehta told reporters.

The fresh slippages in September last year were over Rs 11,000 crore, but now they are at little over Rs 8,000 crore, he said.

Mumbai-based Union Bank posted a net loss of Rs 1,531 crore in Q2FY18 on a sharp rise in provisions for bad loans. This was against a profit of Rs 177 crore in the July-September Q2FY17.

Its asset quality improved with slippages of Rs 2,686 crore in the second quarter of FY18, 40 per cent lower than the previous year’s quarter. Sequentially gross NPAs ratio stood at 12.35 per cent at the end of September 2017 against 12.63 in the previous quarter and 10.73 per cent in the same quarter a year-ago. 

The bank made an upfront provision of Rs 1,566 crore for 11 bad accounts referred in the first list prepared by the RBI in June, instead of spreading it over three quarters. Rajkiran Rai G, managing director and chief officer, said, “We have front loaded and taken full hit of National Company Law Tribunal (NCLT) provision.” 

The bank has 11 accounts in the first list with outstanding loans of Rs 7,665 crore and 18 accounts in the second list amounting to exposure of Rs 4,792 crore at the end of September 2017. The bank will further need to make an additional provision of Rs 1,087 crore for the second list. 

The provision coverage ratio (PCR) stood at  56.06 per cent at the end of September 2017, up from 50.45  per cent in September 2016. 

The PCR was at 51.53 per cent at the end of June 2016. Meanwhile, Kolkata-based UCO Bank’s net losses increased to Rs 622.5 crore in Q2FY18 from Rs 384.8 crore in Q2FY17.  Its provision for NPAs grew to Rs 1,323 crore in Q2FY18 from Rs 980 crore in Q2FY17.

Quarterly Results

• PNB posted a 2.2 per cent rise
• Union Bank posted a net loss of Rs 1,531 crore
• UCO Bank’s net losses increased to Rs 622.5 crore in Q2FY18 from Rs 384.8 crore in Q2FY17