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Bad Loan Woes Continue To Haunt Private Sector Banks As They Declare September Quarter Results
An Axis Bank branch in Mumbai.
India's the third largest private lender, Axis Bank, has reported a 71 per cent quarter-on-quarter rise in gross bad loans adding that more bad news is in store. The increase was chiefly because Rs 7, 288 crore worth of assets from the bank’s watch list went bad in the three months.
Announcing its March quarter results, the bank claimed it had created a watch list with assets worth Rs 22,000 crore, which are at a high risk of turning bad from which 39 per cent already falling in the pit. At the end of September, Axis Bank’s gross non-performing asset (NPA) ratio was at 4.17 per cent. The slippages resulted in Rs 3,623 crore in provisions, decreasing the net profit to Rs 319 crore, an 83 per cent decline from the previous year.
State-run lender IDBI Bank reported a gross NPA ratio of 13.05 per cent at the end of September as opposed to 11.92 per cent in the previous three months. The net interest income of the bank fell 0.4 per cent by giving loans. Joining this with a rise in provisions led to IDBI Bank’s net profit getting halved to Rs 55.52 crore. Starting its operations in October of 2015, IDFC Bank reported a gross NPA ratio of 6 per cent, which is slightly lower than 6.1 per cent reported in the June quarter.
However, India’s largest lender in the private sector, HDFC Bank reported a steady 20 per cent net profit growth, enhanced by higher net interest income and other income. Gross NPAs went up by 3.01 per cent to Rs 5,069.04 crore at the end of September and gross bad loans ratio stood at 1.02 per cent.
The bank’s outcomes yet did not escape the stoppage in the corporate loan segment. HDFC Bank deputy managing director Paresh Sukthankar said the wholesale loan book, which grew 14 per cent from last year, wadded the retail loan growth of 21.5 per cent as a result of higher repayment of working capital loans over the last six months. The present picture indicates that the worst is not over for Indian banks grappling with deflated asset quality.
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