PSU Banks bleed: Aggregate losses of 21 lenders at Rs 11,605 crore in Q3

Aggregate losses for a clutch of 21 public sector banks in the quarter ended December 2018 came in at Rs 11,605 crore, led by a massive loss of Rs 4,737 crore from Bank of India and Rs 4,815 crore from IDBI Bank. The aggregate losses of these 21 banks in the September 2018 quarter stood at Rs 14,716 crore. Of the 21 PSBs, 11 posted a profit, compared to seven banks in the previous quarter, data from Capitaline showed. In Q3FY18, the 21 banks had reported a combined loss of Rs 18,097 crore.

The losses were down 35% y-o-y, which was led by the State Bank of India (SBI) reporting a net profit of Rs 3,954 crore against a net loss of `2,416 crore in Q3FY18. “Lower slippages coupled with lower overhead expenses and write-back of mark-to-market provisions due to softening of bond yields contributed to strengthening of the bottom line,” said Rajnish Kumar, chairman, SBI.

Operationally, the banks fared well with the combined net interest income (NII) increasing nearly 11% y-o-y to Rs 59,505 crore. However, the pre-provisioning profit witnessed a mild reduction of 1.4% y-o-y to Rs 36,515 crore, on account of an increase in interest expense due to increased deposits.

SBI’s deposits grew 6.8% y-o-y to Rs 28 lakh crore and Bank of Baroda’s deposits grew 6.5% to Rs 6.1 lakh crore. Provisions for state-owned banks fell 21% y-o-y, backed by stronger asset quality. Among the 21 banks, the steepest climb in provisions came at Bank of India (BoI), which saw the figure jump 109% y-o-y to Rs 9,000 crore. BoI said it had set aside Rs 5,000 crore additional provisions in view of uncertainty of recovery and deterioration in value of underlying assets against 331 NPA accounts. “In respect of RBI-referred NCLT accounts (list 1 & 2), the bank has made a provision of Rs 572 crore during the quarter ended December 31, 2018, due to uncertainty of recovery. The provision held in respect of NCLT accounts stood at `6,939.02 crore as on December 31, 2018, representing 100% of the outstanding value,” the bank said in a statement

Gross non-performing assets (NPAs) rose 7.2% y-o-y to Rs 8.3 lakh crore. “Gross NPAs increased, however, at a comparatively lower rate in Q3FY19 vis-à-vis a double-digit growth in Q3FY18. This could be due to lower incremental NPAs being generated,” said analysts at Care ratings. All six banks under the Prompt and Corrective Action (PCA) framework of the Reserve Bank of India (RBI) have recorded a spike in NPA numbers. Apart from the banks under PCA, Punjab National Bank (PNB) reported a 35% increase in its NPA to `77,733 crore citing exposure on account of the Nirav Modi-Mehul Choksi fraud.