Neither RBI Nor MOF Can Stop Rise In NPA And Fall In Profits of Public Sector Banks

 My Opinion On continuous fall in profits of public sector banks and rise in NPA is as below and after that various news on quarterly results are given.

Neither RBI Nor MOF Can Stop Rise In NPA And Fall In Profits of Public Sector Banks because they have created the mess in banks by willfully  ignoring rampant corruption in banks, misuse of powers by bank officials, political exploitation of banks for vote bank and indifferent attitude of legal and administrative system . 

It is bankers and politicians who in nexus with RBI officials and MOF officials indulged in bad lending to corporate and willfully ignored the need of recovery for years and decades and intentionally concealed the bad assets taking concurrence of their mentors sitting in government.  This is why not only smaller banks like United bank or U Co bank or Allahabad bank or Central bank, but even prominent banks like SBI, PNB, Canara bank, Bank of Baroda which were for long considered as best banks have shown disheartening results quarter after quarters.

Vigilance officials , inspecting officials , auditors and CVC all played the same game to serve their self interest and to win the hearts of their bosses and finally get higher and higher promotions . 

All these bad flow from top resulted in creation of bad culture in branches of all banks and now they are reaping the fruits which they sowed in past years.But it is pity that they are blaming global recession to hide their faults and heinous crime which they committed for their own interest.

RBI has taken a positive step to start forensic audit of united bank of India and let us hope that they will not do formal and traditional  type audit but conduct sincere forensic audit and I am very much confident that they will understand how much chronic and deep rooted sickness it in the bank, they will also realize how the same position may be in all banks and how it is being allowed to persist for a decade and more. 

There is no doubt to me that If RBI norms are strictly adhered to for recognition of Non Performing Assets , at least 20% of assets will be found fit for treating as NPA. And if provision is correctly made for all eligible risks and all eligible future expenses including pension , bad debts, and other terminal benefits none of the bank will be able to book profit and none of them will be able to save their capital from erosion

Further if RBI tries to find how the reason , they will definitely understand it is bad human resource policy and worst execution of the policy which have  resulted in creation of an atmosphere which is not conducive for good workers but for only flatterers.

Though there are other reasons too behind rise in NPA and fall in Profit of almost all banks, corruption in recruitment, promotion and transfers are the prime and big reason behind rampant sickness. Three decades ago there used to be better quality of recruitment and honesty as well as  seniority based promotions. Bank staff used to be loyal to their organization but now they are more loyal to their bosses.

Though bank management of all banks have been given liberty on staff matters and though they have been using merit oriented promotion policy and IBPS conducted recruitment , health of the bank has deteriorated under so called merit oriented and free regime headed by so called meritorious persons.

Why Private banks are showing better asset quality and gain in profit quarter after quarter under same global and domestic situation is to be thought ovver sincerely and honestly to know the real reasons behind bad health of government banks.

 United Bank posts second straight quarterly loss 

Gross NPA at over 10% gross highest in terms of percentage among listed banks in India

Manojit Saha
Kolkata-based United Bank of India (UB) reported a Rs 1,238 crore of loss in the three-month period ended December as compared to Rs 42.2 crore of profit during the same period of the previous year on the back of Rs 1,858 crore of provisioning. Provisions includes non-performing assets, restructured advances, investments, wage and pensions, among others.

RBI had ordered a forensic audit of the bank after it posted Rs 489 crore of loss in the previous quarter. Pending the audit, loan sanctioning power of the bank was limited to Rs 10 crore.

Most of the financial parameters of the bank declined during the third quarter with gross non-performing assets saw a staggering growth of more than Rs 2,000 crore which stood at Rs 8545 crore which is 10.82 per cent of the gross advances. Net NPA, as on December end was Rs 5630 crore or 7.44 per cent as compared to 5.39 per cent – a quarter ago. Net interest income -- the difference between interest earned and interest expended -- however, grew by almost 20 per cent to Rs 761 crore.

UBI’s gross NPA is highest in terms of percentage, among listed banks in India. The bank officials were unavailable for comments on the performance.

Due to higher provisioning, the capital adequacy ratio also slipped to 9.93 per cent – according to Basel-II framework, as compared to 10.35 per cent in end September. According to Basel-III framework, CAR stood at 9.01 per cent as on December end. Regulation requires banks to have minimum 9 per cent of capital adequacy ratio. 
http://www.business-standard.com/article/companies/united-bank-posts-second-straight-quarterly-loss-114020701304_1.html

Corporation Bank Q3 profit dropped 58% to Rs 127 cr

Total income increased to Rs 4,947.34 cr during the quarter

Corporation bank today reported a 58.21% decline in net profit to Rs 126.69 crore for October-December period of the current financial year mainly due to higher provisioning for bad loans.

The PSU bank had a net profit of Rs 303.17 crore in the the same period of the previous fiscal.

Total income increased to Rs 4,947.34 crore during the quarter under review from Rs 4,257.84 crore in the December quarter of last fiscal, Corporation Bank said in a filing to the BSE.

The net non-performing assets of the bank rose to 2.15% from 1.63%.

Provisioning for bad loans almost doubled to Rs 916 crore during the December quarter, from Rs 406 crore in the same period a year ago.

Shares of Corporation Bank closed at Rs 250.70 on BSE, up 0.97% over previous close on the BSE.

http://www.business-standard.com/article/companies/corporation-bank-q3-profit-dropped-58-to-rs-127-cr-114020701201_1.html 

Andhra Bank Q3 net down 82% at Rs 45 cr

Expenditure rose steeply on all counts, including slippages, while growth in total income was way behind

http://www.business-standard.com/article/companies/andhra-bank-q3-net-down-82-at-rs-45-cr-114020700941_1.html

Bank of India shares fall 10% as results disappoint

Bank of India reports a 27% fall in third quarter net profit to Rs.586 crore, hurt by higher provisions for souring loans

http://www.livemint.com/Companies/vcFTWw1U7xpyMWGud2bXhP/Bank-of-India-shares-fall-10-as-results-disappoint.html

Rise in NPAs hits PSB third quarter results

Lower provision helps Union Bank to reports 15% rise in net

Five of the six public sector banks which announced October-December quarterly earnings on Friday reported a decline in net profit over a year, owing to higher provisioning for bad loans and mark-to-market losses (writing down assets at current value) on their investment portfolio.

Pune-based Bank of Maharashtra was worst among these. It reported a  92 per cent decline in net profit to Rs 15 crore during the third quarter, as compared to Rs 194 crore during the same period of the previous year, due to a sharp rise in loan defaults. The bank reported the proportion of gross non-performing assets (NPAs) to the total at four per cent at end-December, as compared to 1.7 per cent in the same period last year.

Sushil Muhnot, its chairman and managing director (CMD), said: "The increased cost of deposits is one reason for the decline in profits. We have spent Rs 300 crore on staff costs and made a (bad loan, etc) provision of Rs 320 crore. In the past nine months, NPA cost has increased from Rs 1,137 crore to Rs 3,500 crore.”

The only exception in the pack was Mumbai-based Union Bank of India. It reported 15 per cent growth in net profit to Rs 348 crore, despite flat growth in net interest income. The provisioning for standard advances came down to Rs 24 crore from Rs 100 crore a year before,, while NPA provisioning dipped by Rs 56 crore. Gross NPAs (as percentage of gross advances) were 3.36 per cent as on end-December, up both sequentially and over a year.

“We think the worst is over for the bank in asset quality,” said CMD Arun Tiwari.

PNB
Punjab National Bank reported a 42 per cent decline in net profit to Rs 755 crore, due to a similar increase in provisioning. The latter increased 41.5 per cent to Rs 1,947 crore; this was mainly because the bank wrote off a sub-standard asset, of a troubled jewellery maker in which it had exposure close to Rs 900 crore. It also had to make a higher provision for investment depreciation, as bond yields hardened in the quarter, by Rs 219 crore. This was a sixfold increase as compared to the same period of the previous year.

"In difficult circumstances, we were able to hold on to the net interest margin, 3.57 per cent for the quarter and 3.52 per cent for the nine-month period (since the financial year began on April 1). We have managed to maintain the margin through the cost route. Though margins are under pressure, we hope to also maintain it for the current quarter," said K R Kamath, the CMD. He said the restructured asset pipeline was not significant at present.

Despite the decline in net profit, PNB stocks went up by almost six per cent on Friday, despite a flat broader market, as investors drew comfort from the results. “The positive surprise (from PNB) came on asset quality, which improved sequentially. Gross NPAs remained flat quarter on quarter, while net NPAs declined 5.5 per cent, in absolute terms; in percentage terms, both saw improvement. The addition to impaired assets also declined to 4.3 per cent, as compared to 6.7 per cent in the previous quarter,” said Saday Sinha, analyst with Kotak Securities.

Others
Bangalore-based Canara Bank reported a 42.4 per cent decline in net profit to Rs 409 crore, mainly due to higher NPA provisioning. Provisioning rose 68 per cent to Rs 1,052 crore for the quarter, while net interest income went up by 12 per cent to Rs 2,227 crore.

Another south-based lender, Syndicate Bank, reported a 25 per cent decline in net profit to Rs 380 crore as compared to Rs 508 crore in the corresponding quarter last year. Its gross NPA ratio jumped to 2.8 per cent in the quarter as against 2.31 per cent in the year-before period.

Higher provisioning for bad loans pulled down the net profit of Oriental Bank of Commerce by 31 per cent to Rs 224 crore in the quarter. Gross NPAs rose to 3.87 per cent of the total, from 2.98 per cent in the December quarter of 2012-13.