UCO Bank Q3 net drops 69% on steep rise in provisioning
KOLKATA, FEB 5:
An over 70 per cent increase in provisioning dragged down UCO Bank’s net profit 69 per cent, to Rs 102 crore, for the quarter ended December 31, 2012.
Provisioning for non-performing assets and other employee liabilities swelled to Rs 728 crore against Rs 420 crore in the year-ago period.
On a sequential basis, profits remained almost flat, from Rs 104 crore during the quarter ended September 30, 2012.
According to S. Chandrasekharan, Executive Director, UCO Bank set aside nearly Rs 417 crore as provisioning towards NPA (non-performing assets) during the period under review.
Gross NPAs as a percentage of advances increased to 5.53 per cent (3.49 per cent), while net NPAs increased to 3.32 per cent (2.04 per cent). On a sequential basis also, net NPAs were up, compared with 2.94 per cent during the July-September quarter.
The bank witnessed fresh slippages amounting to Rs 1,200 crore during the quarter primarily driven by smaller accounts, Chandrasekharan said. The rise in bad loans affected the bank’s profitability dragging down the net interest margin to 2.3 per cent (2.89 per cent).
“Moving forward margins will improve as we expect fresh slippages to come down and recovery from bad assets to boost our bottomline,” he said.
United Bank of India profit slumps 81%
KOLKATA, FEB 5:
Higher provisioning for non-performing assets (NPAs) dragged down the net profit of United Bank of India by 81 per cent to Rs 42 crore during the October-December quarter.
Total provisioning during the quarter grew by 126 per cent to Rs 450 crore (Rs 199 crore).
According to Sanjay Arya, Executive Director, United Bank of India, NPA provisioning increased by 238 per cent to Rs 314 crore (Rs 93 crore) during the quarter under review.
“Our NPA provisioning was higher during this quarter as there was some deterioration in asset quality. But moving forward we hope the asset quality to improve,” Arya told Business Line. Fresh slippages stood at Rs 660 crore and came primarily from the bank’s exposures to the steel and textile sectors.
Gross NPAs as a percentage of total advances increased to 4.42 per cent (3.28 per cent), while net NPAs rose to 2.22 per cent (2.01 per cent).
The rise in bad assets affected the bank’s profitability dragging down the net interest margin to 2.68 per cent (3.3 per cent). The bank aims to achieve NIM of 2.75-2.8 per cent by the end of this fiscal, he said.
Capital adequacy ratio stood at 11.88 per cent as on December 31, 2012. The bank is hopeful of getting capital infusion of Rs 100 crore from the Government this quarter. Shares of United Bank of India closed at Rs 70.80, down by 3.34 per cent on the BSE on Tuesday.
Bank of Baroda’s Q3 net slips 21.6% on higher provisioning
Higher provision for bad loans coupled with drop in non-interest income weighed on Bank of Baroda’s profitability in the October-December 2012 quarter.
In the reporting quarter, the public sector bank reported a net profit of Rs 1,012 crore, down 21.6 per cent, compared with Rs 1,290 crore in the year-ago period.
Net interest income (the difference between interest earned and expended) nudged up 7 per cent at Rs 2,841 crore (Rs 2,656 crore in the year-ago period).
However, non-interest income declined by 27 per cent at Rs 841 crore (Rs 1,149 crore).
Provisions for bad loans, an expense that is set aside as an allowance, was higher at Rs 817 crore (Rs 509 crore). During the quarter, bad loans, in gross terms, rose by Rs 1,442 crore to Rs 7,321 crore.
Non-interest income was impacted mainly on account of drop in trading gains and decline in profit on exchange transactions.
Banks' provisioning to go up by Rs 150 bn in 3 yrs: CRISIL
CRISIL Ratings, India's largest credit rating agency, believes that Reserve Bank of India's (RBI's) draft guidelines, if implemented in the current form, would increase the banking sector's provisioning requirement by Rs.150 billion between April 2013 and March 2015.
RBI restructuring norms will strengthen confidence in asset quality, says CRISIL
CRISIL Ratings, India's largest credit rating agency, believes that Reserve Bank of India's (RBI's) draft guidelines, if implemented in the current form, would increase the banking sector's provisioning requirement by Rs.150 billion between April 2013 and March 2015. This is expected to lower banks' profits by around 7 per cent for this period. Nevertheless, there are two key qualitative positives that emerge from these guidelines. First is the withdrawal of regulatory forbearance for restructured loans from April 2015. Second is the tightening of the process of restructuring. These stipulations will enhance the confidence of stakeholders in banks' asset quality and discourage large-scale restructuring activity.
CRISIL had earlier highlighted the risk of increase in loan restructuring for Indian banks (refer to CRISIL release ‘Loan restructuring to reach Rs.3.25 trillion by March 2013' dated August 30, 2012). The cumulative loan restructuring from April 2011 touched Rs.2.25 trillion by December 2012. CRISIL believes that loan restructuring activity will continue over the near term, albeit at a slower pace.
In the context of such a significant quantum of restructuring, the revised guidelines will result in a Rs.150-billion increase in the provisioning costs for banks over the next two years. This quantum factors in the combined impact of higher provisioning (of 5 per cent by March 2015) on existing stock of restructured loans, and expected incremental restructuring. The impact on public sector banks will be greater, as they account for around 85 per cent of the total loan restructuring.
Says Mr. Pawan Agrawal, Senior Director, CRISIL Ratings, "The guidelines will strengthen the NPA recognition norms of banks by withdrawing regulatory forbearance for restructured loans, and proposing tighter norms for upgradation of NPAs from restructured accounts." This alignment with international best practices will improve confidence in banking sector's asset quality. This, in turn, will encourage banks to enhance their credit underwriting and monitoring practices, particularly for large corporates.
Adds Mr. Agrawal, "The guidelines also seek to dissuade large-scale restructuring by Indian banks by making it costlier for banks, tightening viability assessment criteria for loan restructuring, and stipulating higher promoter commitment."
The revised guidelines also provide an adequate transition period for banks to adapt to the new regulations. Mr. Suman Chowdhury, Director, CRISIL Ratings, says, "The continuation of asset classification benefits to banks for their restructured under-construction infrastructure project loans beyond March 2015 provides them with some breathing space." This recognises the challenges inherent in estimating timelines for necessary clearances during the projects' implementation phase.
25 % drop in Corporation Bank’s profit
Corporation Bank recorded a net profit of Rs.303.17 crore in the third quarter of this fiscal as compared to Rs.402.22 crore in the corresponding period in the previous year, marking a 24.62 per cent fall.
Its operating profit was lower at Rs.758.93 crore against Rs.797.74 crore, a drop of 4.86 per cent.
Total income, however, grew by 12.8 per cent and reached Rs.4,257.85 crore against Rs.3,776.31 crore.
For the nine months of this fiscal, the bank’s net profit was Rs.1,079.14 crore against Rs.1,154.78 crore in the previous financial year, a fall of 6.55 per cent.
Chairman and Managing Director of the bank Ajai Kumar, who released the results at a press conference here on Friday, said the figures had to be seen in the context of many other things, including the Rs.115 crore earned in the third quarter of previous financial year owing to disinvestment in mutual funds as directed by the Reserve Bank of India and provisions.
Allahabad Bank net dips on higher provisioning for bad debts
KOLKATA, JAN 31:
Public sector lender Allahabad Bank on Thursday said that it intends to open 250 branches during the fiscal. Of these, 148 have already been opened and the bank has obtained authorisation for opening 140 more.
The bank currently has 2,664 branches.
According to Subhalakshmi Panse, Chairman and Managing Director, Allahabad Bank, the bank has also sought capital infusion of nearly Rs 1,500 crore. “We have applied to the government for capital infusion,” she told reporters at a press conference.
NET PROFIT DIPS
The bank, meanwhile, reported a near 45 per cent dip in net profit to Rs 311 crore for the quarter ending December. Its net profit stood at Rs 560 crore for the corresponding quarter last fiscal.
The net non-performing assets (NPA) or bad loans increased to 2.06 per cent (0.79 per cent).
During the quarter, total income stood at Rs 4,735 crore (Rs 3,912 crore).
According to Panse, a higher provisioning for bad debt and non-performing assets, standard restructuring and provisions for wage revision of employees impacted net profit.
“Apart from higher provisioning for NPAs, the RBI has recently mandated higher provisioning for standard restructuring for which we have to set aside an additional Rs 93 crore in the third quarter,” she said.
Provisions against bad loans stood at Rs 432 crore (Rs 421 crore). Operating expenses increased 16 per cent to Rs 811 crore.
On Thursday, Allahabad Bank stock was trading at around Rs 163.50, down 2.15 per cent on the BSE.
| Indian Bank Q3 net down 37% at Rs 331 cr | |||||||||||||||||||||||||
| Total income for the third quarter rose to Rs 3,786 crore from Rs 3,505 crore in the year-ago period Public sector lender Indian Bank has posted a drop of 37.1% in net profit for the quarter ended December 31, 2012, at Rs 330.58 crore compared to Rs 525.92 crore net profit during the same period of last fiscal, mainly owing to the higher provisioning towards various requirements. The total income of the Bank stood at Rs 3,786.63 crore for the three months ended December 31, 2012, as against Rs 3,505.92 crore registered during the corresponding period of last year, an increase of 8%.
he Bank's non performing assets has shown an increase during the quarter as compared to the same period last year.
T M Bhasin, chairman and managing director of Indian Bank, told reporters that the Bank had to make an additional provisioning of around Rs 150 crore in the third quarter. The Bank had to make a provision of Rs 40 crore towards pension corpus for second time option offered for employees opted for VRS (voluntary retirement scheme).
"There was also an adhoc provision of Rs 15 crore towards expected wage revision. In addition, Rs 96 crore has been provided towards restructured assets," he added.
Besides, there were two items of exceptional income in the quarter ended December 2011, which increased the profit during that fiscal if it is compared with the quarter ended December 2012. There was a reversal of provision on deferred tax liability, which was around Rs 52 crore and a one time income of Rs 51 crore from foreign exchange during the quarter ended December, 2011, he said. The gross NPA has shown an increase to Rs 3,180.1 crore during the quarter ended December 31, 2012, compared to 1,190.4 crore during the same period of previous fiscal year. The percentage of gross NPA stood at 3.18 per cent during the last quarter compared to 1.35 per cent on the corresponding period of previous fiscal.
There were slippages in some accounts in real estate and boiler construction sectors during the nine months ended December 2012, compared to the corresponding period of previous fiscal.
The net NPA has increased from Rs 695.31 crore (0.80%) in quarter ended December 31, 2011, to Rs 2141.86 crore (2.17%) during the third quarter of the current fiscal. The increase in NPA is because of some technical reasons and the Bank is expecting the NPA levels to come down in near future, said Bhasin.
To cut base rate
The State-run commercial lender is also planning to cut base rates by 30 basis points, from February 9, 2013. The base rates would be reduced from 10.5 per cent to 10.2 per cent, with this.
The Bank would also get around Rs 330 crore from the recent policy relaxation by Reserve Bank of India (RBI). It may be noted that the RBI in the end of January, has announced cut on Cash Reserve Ratio by 25 basis point to 4 per cent. This is expected to see an infusion of Rs 18,000 crore into the banking system, of which a share would come to the Indian Bank.
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