Bank bad loans have not worsened in the March quarter

Moneylife Digital Team 24 May 2013

Pressure on NPAs, especially for public sector banks will continue as more loans turn into non-performing assets due to the overall slowdown in the Indian and global economy, says a study by NPAsource

Net non-performing assets (NPAs) or bad loans of 39 listed banks increased by a negligible 0.8% or Rs750 crore only in the fourth quarter of 2012-13 due to high provisioning. However, for the full fiscal year net NPAs of these lenders jumped 51% to Rs92,825 crore, says a study conducted by NPAsource.com.

According to the study, gross NPAs of these 39 listed banks stood at Rs1.79 lakh crore as on March 2013, compared with Rs1.78 lakh crore as on December 2012, implying rise of Rs887 crore during the fourth quarter. During 2012-13, gross NPAs of these 39 banks rose by 36.1%, while net NPAs rose by 51.2%.

“We believe that with the interest rates expected to come down, the next few quarters may see a slowdown in the growth rate of NPAs. But, pressure on NPAs, especially for public sector banks will continue as more loans become NPAs due to the overall slowdown in the Indian and global economy. As a large chunk of the provisioning for NPAs is done by most banks in the last quarter, there is a marginal increase in NPAs in Q4 of FY2013. But, the first two quarters of current fiscal are going to see a higher growth in NPAs as provisioning will be low," said DK Jain, chairman and managing director of Atishya Group that owns NPAsource.com.

According to the study, for FY13, net NPAs of 39 listed banks rose 51.2% to Rs92,825 crore from Rs61,381 crore a year ago. Out of the total 40 banks listed on stock exchanges, 39 have declared their results so far. Of the banks that have declared results, eight banks have reported reductions of more than Rs100 crore in net NPAs during the fourth quarter. These eight banks together accounted for drop of around Rs5,645 crore in net NPAs during the March quarter, NPAsource said.

During the fourth quarter, State Bank of India (SBI) the largest lender in the country reported the biggest drop of around Rs3,400 crore. Net NPAs of Central Bank of India, Punjab National Bank (PNB), Corporation Bank and IDBI Bank fell by 14.9%, 4.6%, 16.9% and 6.1%, respectively, during the fourth quarter.

These five banks accounted for more than Rs5,100 crore drop in net NPAs. As per the Q4 and FY2013 results declared by the SBI, the lender's provisioning for NPAs in the fourth quarter of 2012-13 was 40% higher at Rs3,974 crore as against Rs2,836 crore same period last year.

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