PSU banks announce share-swap ratios ahead of April 1 merger

Following the footsteps of State Bank of India and Bank of Baroda, the boards of 10 public-sector banks on Thursday approved mergers and issued share-swap ratios to create four large banks in the economy.

The four anchor banks will be Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank. The merger will be effective from April 1.

Last year, Bank of Baroda took over Vijaya Bank and Dena Bank. Before that, State Bank of India (SBI) had merged all its five associate banks with itself to enter the global top 50 banks’ list in terms of size. Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce to create the largest bank in the country after State Bank of India.

According to notifications to the stock exchanges, Delhi-based PNB will issue 1,150 shares for 1,000 shares of Oriental Bank of Commerce, and 121 shares for 1,000 shares of United Bank of India.

Mumbai-based Union Bank of India will take Andhra Bank and Corporation Bank. Union Bank of India will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.

Bengaluru-based Canara Bank will issue 158 shares for 1,000 shares of Syndicate Bank.

Allahabad Bank said for every 1,000 shares (face value Rs 10) of Allahabad Bank, there would be 115 shares (face value Rs 10) of Indian Bank.

The Union Cabinet had approved the consolidation to build the mega banks “to create more efficient and bigger public sector banks in the challenging environment to meet the credit needs of a growing economy and to achieve operational efficiency by scale of business”. The amalgamation will lead to a wide geographical reach, technology adaption, and, more importantly, better utilisation of scarce capital.

A grievance redress system has been put in place, and a committee has been formed headed by a retired judge. If shareholders have any issue with the swap ratio — for example, if they feel they didn’t get enough time or if they need information — they can raise it. This is the board-approved swap ratio.

“After the committee receives all the grievances, it will have seven days to recommend changes, if needed, which will be the final swap ratio,” said a top official of a PSB to be merged.

Read More

Andhra bank posts profit in Q3

Andhra Bank has posted a standalone net profit of ₹162.80 crore for the quarter ended December 2019.

In the corresponding period of previous fiscal, it had reported a loss of ₹578.59 crore. The net profit during the quarter came on the back of a 5% increase in the total income to ₹5,595.19 crore (₹5,322.33 crore).

The gross non-performing assets (NPAs) during the quarter was 17.26% as against 16.68% in the year earlier period. The Net NPA were lower at 6.36% in comparison to the year earlier period’s 6.99%. The interest earned increased to ₹4,937.19 crore (₹4,796.65 crore). Other income were higher at ₹658 crore (₹525.68 crore).

On a consolidated basis, the net profit during the third quarter of this fiscal was ₹174.76 crore. The bank had reported a loss of ₹573.52 crore in the corresponding period of previous fiscal. Total income increased to ₹5,919.14 crore (₹5,609.43 crore).

The Provision Coverage Ratio as on December 31 was 73.62%, the bank said

Read More

Andhra Bank has posts net profit in Q2

Andhra Bank has posted a net profit of Rs 122 crores for the quarter ended September 30, 2019.

This profit accounted for a 35 per cent growth over the first quarter performance ended June, 2019, a bank statement said on Thursday.

The total deposits of the Bank stood at Rs 2,17,970 crore during the quarter as compared to Rs 2,06,697 crore during the same quarter last year by posting 5.45 per cent growth.

The total business of the bank stood at Rs 3,95,068 crore as compared to Rs 3,75,534 crore during the same period last year by posting 5.20 per cent growth.

Net NPAs were 5.95 per cent as compared with 5.73 per cent at the end of March 2019, the statement added.

The Bank has 2876 number of branches (rural 749, SU 763, Urban 652 and Metros 712) and 4 extension counters, and 3798 number of ATMs/BNAs/CRs. The total number od delivery channels of the Bank was 6678.

Agricultural Credit registered a Year-on-Year growth of 7.73 per cent and stood at Rs 35,961 crore, the statement added.  

Read More

Andhra bank Q1 result, returned in to profit

State-owned Andhra Bank returned to profit in the first quarter ended June 30, by recording a standalone net profit of Rs 51.56 crore as provisions for bad loans came down.

The bank had registered a net loss of Rs 539.83 crore in the corresponding quarter of the previous financial year 2018-19. Sequentially, it had posted a net loss of Rs 1,233.61 crore in the quarter ended March 2019.

The lender''s total income, however, increased to Rs 5,437.03 crore in three months to June 2019 as compared with Rs 5,092.08 crore in the year-ago period, Andhra Bank said in a regulatory filing on Friday.

There was a slight improvement in bad asset ratio, as the gross non-performing assets (NPAs) stood at 16.44 per cent of the gross advances as on June 30, compared with 16.69 per cent a year ago and 16.21 per cent by the end of March 2019.

Net NPAs were 5.67 per cent as compared with 7.96 per cent at the end of June 2018. It was at 5.73 per cent by the end of March 2019.

The bank''s provisions for bad loans reduced to Rs 922.96 crore for the quarter from Rs 1,387.87 crore a year ago. Overall provisions and contingencies were down at Rs 1,041.04 crore during the quarter, against Rs 1,707.50 crore a year ago.

Provision coverage ratio as on June 30 was 74.45 per cent, Andhra Bank said.

On a consolidated basis, the bank posted a net profit of Rs 39.49 crore, compared with a net loss of Rs 536.80 crore a year earlier. Total income for the year was up at Rs 5,723.60 crore, against Rs 5,315.56 crore a year ago.

The lender posted losses in the all the four quarters of the previous fiscal year 2018-19, registering a collective loss of Rs 2,786.13 crore during the year.

Read More

Five PSU banks have over 70% NPA from industry in FY19

The non-performing assets (NPAs) in the industry sector accounted for over 50 per cent of the total bad debts in 18 of the 20 state-run banks in 2018-19, indicating the massive concentration risk still facing the banking sector.

Five state-run banks reported that bad debts from industry contributed more than 70 per cent of their total NPAs, according to Reserve Bank of India (RBI) data presented by the Finance Ministry to the Lok Sabha Monday.

Alarmingly, of these five banks, four are relatively smaller ones.

Andhra Bank had the highest share of industry bad debts at 86 per cent, followed by United Bank of India (UBI) at 78 per cent and Indian Bank at 74 per cent.

The country’s largest bank, State Bank of India (SBI) had 73 per cent of its bad debts from the industry sector, followed by Allahabad Bank at 70 per cent.

Only two banks saw the share of industry NPAs at less than 50 per cent — Syndicate Bank and Bank of India at 36 per cent and 49 per cent, respectively.

Industry issue

Basic metals and metal products, gems and jewellery, engineering, vehicles, construction and textiles have been the major groups within industry seeing high levels of stress, RBI had pointed out in its December 2018 report of trends and progress in banking in India.

In 2017-18, even though industry received 37.3 per cent of total loans and advances by all the banks, it contributed to about three-fourth of the total NPAs.

However, with resolution under the Insolvency and Bankruptcy Code (IBC) picking up pace in 2018-19, industry NPAs have been coming down and banks have been making better recoveries.

The gross NPAs of state-run banks as of March 2019 was at Rs 8.06 lakh crore, as against Rs 8.95 lakh crore in the year-ago period.

Steps taken to resolve bad debts

The Modi government has announced many steps over the last few years to tackle the burgeoning bad debt problem. These include enactment of the IBC, amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, staffing the debt recovery tribunals, and asking banks to crack down on defaulters.

However, despite all these steps, resolution of bad debts has been a slow process, forcing the Modi government to go in for a massive bank capitalisation drive to ensure that state-run banks do not breach any regulatory capital requirements.

The government has also accelerated the bank consolidation drive by merging a big banks with smaller, lesser-performing ones to create a large competitive entity. The government merged State Bank of India with its associate banks and followed it with the merger of Bank of Baroda, Vijaya Bank and Dena Bank.

Read More

Punjab National Bank (PNB) likely to takeover two or three PSU banks

Punjab National Bank (PNB) is likely to takeover two to three smaller state-run banks -- Oriental Bank of Commerce (OBC), Andhra Bank and Allahabad Bank -- in the next three months, reports Reuters.

The government has been striving to revive the health of public sector banks. In February, it announced a recapitalisation tranche of Rs 48,239 crore for as many as 12 public sector banks in a bid to take them out of Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) framework. Their lending ability was constrained by RBI when they were put under this framework.

The 12 banks are Allahabad Bank, Corporation Bank of India, Bank of India, Bank of Maharashtra, Punjab National Bank, Union Bank of India, Andhra Bank, Syndicate Bank, Central Bank of India, United Bank of India, UCO Bank and Indian Overseas Bank.

Read More

Andhra bank loss narrows in Q4FY19

State-owned Andhra Bank May 13 reported narrowing of loss to Rs 1,233.61 crore for the fourth quarter ended March 31, mainly on account of reduction in non-performing assets.

The bank had booked a net loss of Rs 2,535.82 crore in the corresponding quarter of 2017-18.

The total income rose to Rs 5,313.53 crore in the March quarter, compared to Rs 5,092.62 crore in the year-ago period, Andhra Bank said in a regulatory filing.

The bank's gross NPA reduced to 16.21 per cent of total assets as compared to 17.09 per cent in the corresponding quarter of the previous fiscal.

Similarly, the net NPAs also eased to 5.73 per cent from 8.48 per cent in January-March quarter of 2017-18.

As a result provision for bad loans less than halved to Rs 2,341.06 crore during the quarter as compared to Rs 5,562.76 crore in the same period a year ago.

Read More

Andhra Bank's net loss widens in Q3

State-owned Andhra Bank on Monday said its net loss widened to Rs 578.59 crore in the third quarter ended December 31, as bad loans surged. The bank had posted a net loss of Rs 532.02 crore in the October-December quarter previous fiscal.

Also read- Results of all Public & Private Sector banks in India for Q3FY19 

Total income, however, rose to Rs 5,322.33 crore for the third quarter of 2018-19 as against Rs 5,093.43 crore in same period last year, Andhra Bank said in a regulatory filing.

Provisions for bad loans during the quarter were raised to Rs 1,790.17 crore, from Rs 1,744.99 crore parked for the same period last fiscal.

The bank witnessed its asset quality deteriorating as gross non-performing assets (NPAs) or bad loans ballooned to 16.68 per cent of gross advances by December-end 2018, compared to 14.26 per cent.

In absolute value, the gross bad loans were Rs 28,703.47 crore as against Rs 21,599.32 crore.Net NPAs, however, were trimmed to 6.99 per cent (Rs 10,778.36 crore) by end of the third quarter as against 7.72 per cent (Rs 10,858.32 crore) a year ago.

The provision coverage ratio as on 31st December, 2018 stood at 68.47 per cent, Andhra Bank said.

Read More