Dena Bank Q2 net falls 52% on flat net interest income

Showing stress in the system, its GNPAs grew to Rs 3,861 crore

Public sector lender Dena Bank’s net profits for the July-September quarter more than halved to Rs 51.5 crore on a sharp rise in provisions for bad loans and flat net interest income.

It had posted net profit of Rs 107.3 crore in July-September quarter last year.

The net interest income for the reporting quarter was Rs 624 crore as against Rs 626 crore in the July-September 2013. The flat growth in interest income impacted the bottomline. The other income rose to Rs 179.3 crore from Rs 150 crore.

The Dena Bank scrip closed 5.2 per cent down at Rs 61 per share on the BSE.

Ashwani Kumar, chairman and managing director, Dena Bank, said its net profit was hit by higher provisions for non-performing assets (NPAs), including one case of fraud.

The provisions for bad loans for the reported quarter shot up to Rs 256 crore from Rs 156 crore.

The bank also made a provision of Rs 42 crore for fraud at its Malabar Hill branch, Mumbai, as a prudent measure.

Kumar declined to comment on the case, saying that enquiry by the CBI is underway. The bank had also set aside money for this case in the April-June quarter.

The slippages were to the tune of Rs 1,200 crore in the quarter. It included two large accounts- GTL Ltd (Rs 180 crore) and a copper unit Rs 56 crore. Loans to GTL were recast under corporate debt restructuring mechanism but the package has failed, Kumar said.

It restructured loans in excess of Rs 550 crore in the quarter ended September 30, and expects to restructure loans worth Rs 300 crore in the quarter ending December 2014.

Its gross NPAs grew to Rs 3,861 crore (5.12 per cent) at end of September 2014 from Rs 1,968 crore (three per cent) from September 2013.

The net NPAs also rose sharply to 3.59 per cent from 2.02 per cent with provision coverage of 51.9 per cent at end of September this year.

The Mumbai-based lender’s advances rose by 14.8 per cent to Rs 75,367 crore up from Rs 65,664 crore a year ago. It expects to grow its loan book by 15-16 per cent by end of March 2015.

Its deposits grew to Rs 1,06,460 crore from Rs 93,668 crore a year ago.

Referring to capital infusion plans, the Dena Bank CMD said the bank plans to raise capital up to Rs 2,300 crore through Basel-III compliant tier-I bonds in the next three months. The board has given a nod for proposal.

Its capital adequacy ratio was 10.99 per cent at end of Q2 with tier-I of 7.28 per cent.