Indicating that the worst is not yet over for the banking sector, five public sector banks — Bank of Baroda (BoB), Central Bank of India, UCO Bank, Allahabad Bank and Dena Bank — have plunged deep into the red with Rs 6,750 crore loss on the back of ballooning non-performing assets and provisions.
BoB shocked the Street with loss of Rs 3,230 crore for the fourth quarter ended March 2016 as against profit of Rs 598 crore in the same period of last year and a 146 per cent jump in NPAs to Rs 40,521 crore from Rs 16,261 crore in the year-ago period.
The bank had reported a net loss of Rs 3,342.04 crore for Q3 in the wake of huge provisions. With this, the full year standalone loss for the bank is Rs 5,395 crore — the largest annual loss for an Indian bank — as against a profit of Rs 3,398 crore in FY15.
According to PS Jayakumar, managing director & CEO, Bank of Baroda, the bank made provisions of Rs 6,857 crore in Q4 as against Rs 1,817 crore last year. With this, the bank has made a whopping provision of Rs 15,513 crore for the full year. “The net profit must be read in the context of additional one time provision of Rs 4,464 crore that has been taken in Q4 FY16,” it said.
UCO Bank has reported a net loss of Rs 1,715.1 crore for the March quarter on account of surge in bad loans. The bank had posted a net profit of Rs 209.2 crore in the January-March quarter of 2014-15. The gross NPAs as a percentage to total advances rose significantly to 15.43 per cent in the fourth quarter of the last fiscal as against 6.76 per cent in the same period a year ago.
Central Bank of India has posted a net loss of Rs 898 crore for the March quarter due to higher provisions for bad loans. This was the second consecutive quarter that the bank has reported a net loss. The bank had reported a loss of Rs 835.52 crore in the third quarter while it reported a profit of Rs174.29 crore in the March 2015 quarter. Central Bank’s gross NPAs surged to Rs 22,721 crore in the March quarter from Rs 11,873.05 crore a year ago.
The bank has reported gross NPAs of 11.95 per cent of advances during the March quarter against 6.09 per cent in the year-ago period. NPAs over 10 per cent may lead the RBI to initiate “prompt corrective action” to deal with bad loans.
Allahabad Bank reported a net loss of Rs 581.13 crore for the March quarter as it substantially raised the amount towards bad loans provisioning in accordance with RBI’s asset quality directives. On asset front, bank’s gross NPAs as a percentage of gross advances rose to 9.76 per cent as on March 2016, from 5.46 per cent a year ago.
Dena Bank has made a loss of Rs 326 crore for Q4 as against a profit of Rs 55.8 crore previously. Gross NPAs increased to 9.9 per cent as against 5.4 per cent for the quarter ended March 2015. Provisions nearly doubled to Rs 901 crore as against Rs 478 crore in the same quarter a year ago.
Union Bank of India was the only bank to post a profit but it reported a 78.34 per cent fall in net profit to Rs 96.12 crore in the fourth quarter compared to Rs 443.77 crore a year ago due to a spike in bad loans and provisions. Gross NPAs rose 85.4 per cent to Rs 24,171 crore (8.70 per cent of advances) at the end of the March quarter from Rs 13,031 crore (4.96 per cent) a year ago following the asset quality review as per the RBI directive.