Monday, November 29, 1999

Bad loans grow at PSBs, fall at pvt peers

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It is assumed that the best indicator of the banking industry's health is the levels of non-performing assets. On that basis, private sector banks seem to be quite healthy than the public sector banks (PSBs). According to a study carried out by FE, it is revealed that the growth of sticky loans of PSBs was higher as compared to private banks during January-March '10. The net non-performing assets (NNPA) of 8 private banks decreased by 16.7% in January-March this year as against an increase of 63.8 % for 25 PSBs.Milind Gadkari, GM, CARE Ratings said: "Private sector banks had traditionally focused on high return/short-medium term/unsecured retail lending products-personal loans/credit cards and had therefore faced relatively higher NPAs as compared to PSU banks. However post September 2008, many private sector banks contracted their retail lending and stepped up their recovery processes thereby controlling increase in NPA levels. PSU banks on the other hand reported higher slippages especially from the Restructured Assets leading to an increase in GNPAs/NNPAs in the recent quarters."The gross non-performing assets (GNPA) of private banks increased 2% as against an increase of 38% of PSBs. Among the PSBs, highest increase in GNPA was registered in the case of Bank of India followed by Indian Overseas Bank. The average NNPAs to net advances ratio of 25 PSBs increased from 0.71% in January-March'09 to 0.97% in January-March'10. And in the case of private banks, the ratio decreased from 1.34% to 1.01% during the above period.In absolute terms, the NNPA of 8 private banks decreased from Rs 6,190 crore in January-March '09 to Rs 5,158 crore in January-March '10.Among the private banks-Yes Bank showed the highest decline in NNPA , followed by South Ind Bank.Yes bank's key strength has been its ability to maintain a healthy asset quality, despite the strong balance sheet growth in past years. During 4QFY10 GNPA's declined by 29% Y-o-Y and NNPAs fell by 68% Y-o-Y with the bank improving its coverage ratio to 78% (52% last year).The NNPA of ICICI Bank decreased from Rs 4,554 crore to Rs 3,841 crore during the study period.In the case of 25 PSBs, the NNPA increased from Rs 11,402 crore to Rs 18,672 crore. The highest increase in NNPA was seen in the case of Bank of India ,IOB and PNB.Asset quality of PNB deteriorated with slippages running high at 2% annualised, second quarter in a row (1.9% in Q3FY10).Among private banks, ICICI Bank increased its NNPAs to net advances ratio from 2.09% in January-March '09 to 2.12% in January-March '10 and HDFC Bank showed a decline from 0.60 % to 0.30%. The top three private banks according to the ratio of NNPAs to advances in January-March '10 are DCB, ICICI Bank and ING Vysya Bank.Among the PSBs, PNB increased its NNPAs to net advances ratio from 0.17% to 0.53% and Vijaya Bank from 0.82% to 1.40%.The top three PSBs according to the ratio of NNPAs to advances in January-March '10 are IOB, United Bank and Bank Of Maharashtra. The highest increase in NNPA during January-March '10 was seen in Axis Bank among private banks and PNB among PSBs.

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