)
Non-performing assets (NPAs) are rising sharply in the books of private sector banks, too, though these lenders continue to do better than their state-run rivals in managing credit risk. Despite lending cautiously, however, most private lenders saw asset quality deterioration in recent months and had to make higher provisioning, capping their earnings growth.
ICICI Bank, the largest private lender, saw gross NPA additions of Rs 1,230 crore in the October-December quarter, primarily driven by slippages in the small & medium enterprises (SME) and mid-sized corporate loan portfolios. Gross NPA additions in the previous two quarters were Rs 1,116 crore and Rs 1,145 crore, respectively. The net bad loan ratio was at 81 basis points at the end of December, compared to 73 bps a quarter earlier.
The bank has cautioned investors of further NPA additions in the coming quarters. "The industry has continued to see additions to NPA and restructured loan portfolios. I think we have not seen the full impact of these (additions) yet. I expect some more additions in the next two quarters," said Chanda Kochhar, managing director and chief executive officer, in her post-earnings comments.
Rival Axis Bank saw its gross NPA ratio expanding to 1.25 per cent at the end of December, the highest since June 2006. The country's third largest private lender restructured Rs 670 crore of loans in October-December and expects to recast another Rs 1,000 crore of loans in the current quarter.
IndusInd Bank saw a rise in NPAs in its commercial vehicle loan segment during the quarter. And, YES Bank saw its credit quality deteriorate in the period. While sharing his outlook for 2014-15, Rajat Monga, senior group president for financial markets and chief financial officer at YES Bank, said: "I think we will be worse off than last year, in terms of the environment...We are also looking at recovery options from our current labelled assets, including NPAs, including from the ARC (asset reconstruction company) positions, which might not give commensurate provisioning release but at least there will be asset quality release."ICICI Bank, the largest private lender, saw gross NPA additions of Rs 1,230 crore in the October-December quarter, primarily driven by slippages in the small & medium enterprises (SME) and mid-sized corporate loan portfolios. Gross NPA additions in the previous two quarters were Rs 1,116 crore and Rs 1,145 crore, respectively. The net bad loan ratio was at 81 basis points at the end of December, compared to 73 bps a quarter earlier.
The bank has cautioned investors of further NPA additions in the coming quarters. "The industry has continued to see additions to NPA and restructured loan portfolios. I think we have not seen the full impact of these (additions) yet. I expect some more additions in the next two quarters," said Chanda Kochhar, managing director and chief executive officer, in her post-earnings comments.
Rival Axis Bank saw its gross NPA ratio expanding to 1.25 per cent at the end of December, the highest since June 2006. The country's third largest private lender restructured Rs 670 crore of loans in October-December and expects to recast another Rs 1,000 crore of loans in the current quarter.
Even those private lenders which witnessed some improvement in credit quality or have arrested the rise in bad loans are cautious in their forecast. DCB Bank improved its gross NPA ratio by 103 bps from a year earlier to 2.77 per cent at the end of December. However,the top management says asset quality stress hasn’t been eradicated.
"I would not declare victory or (claim) all is well in NPA because the market continues to be in a very challenging situation. We continue to be very watchful. We still have a few loans in both SME and corporate which have been showing stress for the last 18 months...A lot of work is still ahead of us, given the market condition," said Murali M Natrajan, managing director and chief executive.
