Bank NPAs: Net bad loans of 40 banks soar 38 pct to Rs 1.3 trillion in H1

PTI Mumbai 14 Nov 2013

14 banks have reported more than 50 per cent jump
 in their net NPAs during these six months.

The net bad assets of the 40 listed banks have jumped 38 per cent to Rs 1,28,533 crore during the first half of this fiscal, from Rs 93,109 crore at the end of the last fiscal, and is likely to cross Rs 1.5 lakh crore by the end of the fiscal, says a study.

Out of the total 40 listed banks, 14 banks have reported more than 50 per cent jump in their net NPAs during these six months, according to the study.

"The share of top 10 banks in net NPAs has come down to 67.8 per cent in September from 70 per cent in March 2013. Net NPAs of seven banks were higher than 3.5 per cent at the September quarter as against none at the March quarter," says the study by a portal NPAsource.com.

"Net NPAs in the banking system is likely to touch Rs 1.5 lakh crore by March 2014 as two more quarters are remaining in the current fiscal year and the situation is worsening every quarter," Devendra Jain, chairman and managing director of the portal, said.

Gross NPAs as of the September quarter stood at Rs 2,29,007 crore, 27 per cent higher when compared to Rs 1,79,891 crore as of March quarter for these 40 listed banks.

According to the study, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 140 per cent during the same period.

During the second quarter, top public sector banks like State Bank of India, Bank of Baroda, Punjab National Bank, Central Bank, IDBI Bank and Union Bank have all reported more than 30 per cent rise in net NPAs.

For SBI, net NPAs rose to 2.91 per cent from 2.44 per cent in Q2. However, on a sequential basis, NPAs of the nation's largest lender came down by 39.23 per cent. The rising provisions for bad assets pulled down the net profit of the bank by 35.03 per cent.

"With interest rates expected to remain high at least for the remaining fiscal and the economy and corporates inpoor shape, banks have a tough road ahead," he added.

Jain further said more pressure on NPAs will come in next two quarters as many restructured loans of last year will get converted to NPAs.

Single-name concentrations and infrastructure loans have weakened Indian banks' credit profile: Study

18 OCT, 2012, 10.35PM IST, PREETI KULKARNI,ET BUREAU 

MUMBAI: The credit profile of a few Indian banks has weakened due to high single-name concentrations and stress in infrastructure loans, a study conducted by India Ratings, a Fitch group company, has found. "By mid-2012, infrastructure loans at 14.5% had replaced residential mortgage and agriculture as the single largest sector exposure of Indian banks. Together with growing corporate exposure, the resulting single-name concentration in the Indian banking system is now significant enough to generate spikes in stressed assets," the report said. 

As corporate performance is affected by the weakening economic scenario, profitability and interest cover have only slightly improved since the days of the 2008 economic crisis. "A continued slowdown in demand means that corporate performance may continue to suffer till early-2013, putting further cyclical pressure on banks' asset quality," the study said. 

According to India Ratings, the resultant asset quality pressures are reflected in the rise in restructured loans, which, at an estimated 6% of loans by March 2013 (restructured in 2011 and 2012), is already 1.4 times the amount of restructured loans in the aftermath of the 2008 crisis. 

"Regulatory forbearance of restructured loans means that most of this pressure is not reflected in the reported credit cost. The government's ownership of some of the weak borrowers and viability of infrastructure projects in India help mitigate the ultimate loss expectations on some of these loans," it pointed out. 

However, the study has also found that Indian banks can 'absorb stressed credit costs through profits and general loan loss reserves, leaving common equity largely unimpaired'. "Only five out of the 22 banks studied show capital impairment above 10%, with the highest reduction under stress being 36% of existing common equity. The stressed common equity Tier 1 (CET 1) ratios of 20 banks remain above 6% and only one bank (government-owned) is below the regulatory minimum of 4.5%," it noted.