Asset quality of ICICI, HDFC, Axis Bank improves on higher loan recovery-Indian Express
Country's top three private banks have reported reduction in gross NPAs in fourth quarter.
Asset quality concerns appear to be easing for private sector banks, with most of them reporting a reduction in gross non-performing assets (NPAs) in the fourth quarter, on the back of increased recovery.
The top three private banks in the country reported a reduction in gross NPA ratios sequentially as well as on a year-on-year basis in Q4.
ICICI Bank, the country’s largest private sector lender, reported a marginal improvement in gross NPA ratio of 2 bps from Q3, and 19 bps from the year-ago period, at 3.03%. The bank made recoveries worth Rs 400 crore during the quarter.
Chanda Kochhar, managing director & chief executive officer of ICICI Bank, recently said: “On asset quality, I think we are currently at the peak level of NPA addition. In FY15, additions to NPAs and restructured assets should be lower than FY14.”
ICICI Bank added Rs 2,156 crore of restructured loans during the quarter and has a recast pipeline of Rs 1,500 crore.
Similarly, HDFC Bank’s gross NPA levels at the end of Q4FY14 stood at 0.98% against 1.01% in Q3. The lender’s total restructured loans were 0.2% of gross advances, unchanged from the preceding quarter.
“Overall, the asset quality has been stable over the last few quarters. We have been through this cycle and gross NPAs are below our historical average. That incremental NPA formation has come down is evident from the numbers,” said Paresh Sukthankar, deputy managing director, HDFC Bank, recently.
Another private sector lender Axis Bank, however, expects a faster recovery in FY16 only. “In FY15, we expect our credit cost, which is an indication of asset quality pressures, to remain at the same level as this year. Hopefully, FY16 will be the year of recovery,” said Somnath Sengupta, executive director.
Axis Bank’s gross NPA levels were at 1.22% and the lender made recoveries worth Rs 149 crore in Q4. Slippages stood at Rs 301 crore, less than Rs 589 crore in the October-December period.
Kotak Mahindra Bank, on the other hand, said it had a writeback of Rs 34.94 crore on provisions towards advances, which came in mostly through recoveries from bad assets that its asset reconstruction company bought.
Uday Kotak, vice-chairman & managing director, said it has a pool of recoverable assets worth about Rs 2,000 crore and that the bank is looking at buying distressed assets. “Hopefully in FY15, if banks reprice their loans properly, we would love to buy distressed assets,” he added.
Link Indian Express
Fourfold jump in badloans in public sector banks in 5 years-Business Standard -07.05.2014
Bad loans worth Rs 204,000 crore were written off during last 13 year period
All India Bank Employees Association [AIBEA] today released the list of top 400 bad loan accounts in India. Addressing a press conference here today, P.P Varghese, joint secretary, AIBEA and C.D. Jossan, General secretary, All Kerala Bank Employees Federation said that willful default in 406 loan accounts in public sector banks alone comes to the tune of Rs 70,300 crore.
This includes Rs 2673 crore of Kingfisher Airlines, Rs 3156 crore of Winsome Diamond and Jewel, Rs 1810 crore of Zoom Developers and Rs 3672 crore of Sterling Group. Bad loans worth Rs 204,000 crore were written off during last 13 year period.
In just 5 year period [2008-2013] bad loans in public sector banks increased 4.2 times, from Rs 39,000 crore to Rs164,000 crore, they said. They alleged that while the Government is alarmed and concerned about the huge increase in bad loans in the Banks, no effective measures have been taken by the Government to recover these loans.
Since RBI or the Government is not publishing the list of loan defaulters, AIBEA today is publishing the list containing the names of top 400 defaulters of Public Sector Banks. AIBEA today demanded that Banking system must be subject to the auditing of Comptroller and Auditor General of India. Banks must actually recover bad debts instead of artificially reducing the figures in the books of accounts through Corporate Debt Restructuring, selling of Non Performing Assets to Asset Reconstruction Companies at discounted rates, conversion of debt to equity capital investment by Banks.
Personal guarantees must be obtained by the Banks from Promoters of Companies availing of Bank Loans. Laws relating to Recovery of Bank loans must be strengthened to enable effective, speedy, time-bound recovery of bad debts, they said.
Annule SBI-Reliance pact : The reported agreement between State Bank of India [SBI] and Reliance Money Infrastructure Limited for extending banking services by the latter is nothing but privatization of banking services. It is intriguing that the pact signed in February came to limelight only now. It is another astonishing matter that the agreement has retrospective effect from October 5, 2013.
As per the agreement, the Reliance Money as Business Correspondent of SBI will render all the operations of a bank branch, but on higher service charges. While the Business Correspondent model itself is wrought with risks and deficiencies, itis really atrocious that Reliance has been handed over such vital banking functions by a major public sector bank. It is strange that while RBI itself has not chosen to given them license to start their own Bank, the SBI management has brought Reliance through backdoor method into dealing with regular banking services, they said.
This includes Rs 2673 crore of Kingfisher Airlines, Rs 3156 crore of Winsome Diamond and Jewel, Rs 1810 crore of Zoom Developers and Rs 3672 crore of Sterling Group. Bad loans worth Rs 204,000 crore were written off during last 13 year period.
In just 5 year period [2008-2013] bad loans in public sector banks increased 4.2 times, from Rs 39,000 crore to Rs164,000 crore, they said. They alleged that while the Government is alarmed and concerned about the huge increase in bad loans in the Banks, no effective measures have been taken by the Government to recover these loans.
Since RBI or the Government is not publishing the list of loan defaulters, AIBEA today is publishing the list containing the names of top 400 defaulters of Public Sector Banks. AIBEA today demanded that Banking system must be subject to the auditing of Comptroller and Auditor General of India. Banks must actually recover bad debts instead of artificially reducing the figures in the books of accounts through Corporate Debt Restructuring, selling of Non Performing Assets to Asset Reconstruction Companies at discounted rates, conversion of debt to equity capital investment by Banks.
Personal guarantees must be obtained by the Banks from Promoters of Companies availing of Bank Loans. Laws relating to Recovery of Bank loans must be strengthened to enable effective, speedy, time-bound recovery of bad debts, they said.
Annule SBI-Reliance pact : The reported agreement between State Bank of India [SBI] and Reliance Money Infrastructure Limited for extending banking services by the latter is nothing but privatization of banking services. It is intriguing that the pact signed in February came to limelight only now. It is another astonishing matter that the agreement has retrospective effect from October 5, 2013.
As per the agreement, the Reliance Money as Business Correspondent of SBI will render all the operations of a bank branch, but on higher service charges. While the Business Correspondent model itself is wrought with risks and deficiencies, itis really atrocious that Reliance has been handed over such vital banking functions by a major public sector bank. It is strange that while RBI itself has not chosen to given them license to start their own Bank, the SBI management has brought Reliance through backdoor method into dealing with regular banking services, they said.
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