Adding to the increasing pain of the banking sector, public sector Bank of Baroda has come out with the worst set of quarterly numbers reflecting the poor asset quality of PSU banks. The bank posted a quarterly net loss of Rs 3,342 crore, the largest loss by a bank in the Indian banking history, as compared to a profit of Rs 333 crore in the same period of last year.
The loss was driven by a 463 per cent increase in provisions towards bad loans which rose from Rs 1,149 crore in the previous quarter to Rs 6,474 crore. BoB was functioning without a full-time chairman and managing director for almost 15 months after its former CMD SS Mundra was selected as the RBI Deputy Governor.
However, a tax write-back of Rs 1,118.37 crore proved to be a big help in limiting the losses. Otherwise, the loss would have been even higher.
With this, nine PSU banks have made a combined loss of Rs 11,251 crore for the December quarter. The RBI had asked PSU banks to treat some troubled accounts as official bad loans and make adequate provisions. Among the worst performers, IDBI Bank made a loss of Rs 2,184 crore, IOB Rs 1,425 crore loss and Bank of India Rs 1,505 crore.
BoB’s total income declined to Rs 11,726.95 crore in the quarter, from Rs 12,300 crore in the previous quarter.
BoB’s asset quality took a big plunge during the quarter. The bank’s gross non-performing assets (NPA) rose 64.2 per cent QoQ to Rs 38,934 crore (9.68 per cent) while net NPA rose 70 per cent to Rs 21,806 crore.
“Fresh slippage during the quarter was at Rs 15,603 crore. Total restructured standard assets of the bank decreased from Rs 22,930 crore as on September 30, 2015 to Rs 17,135 crore as on December 31, 2015,” the bank said.
During the quarter, as a part of asset quality review (AQR) conducted by RBI, the bank has been advised to reclassify or make additional provisions in respect of certain advance accounts over two quarters ending December 2015 and March 2016. “The bank has accordingly implemented the RBI direction in this quarter,” BoB managing director PS Jayakumar and chairman Ravi Venkatesan said in a statement. “The bank has made provision of 20 per cent on the secured sub-standard advance as against the regulatory requirement of 15 per cent,” BoB said. Further, the bank has done an extensive review of the advance portfolio and has made additional provision for NPAs. Bank of Baroda’s capital adequacy ratio under Basel III norms stood at 12.18 percent.