NPA provisions hit PNB, Dena, Allahabad Bank

Slippages and provisioning pressure to stay high in March quarter, too, say bankers

Punjab National Bank, Allahabad Bank, Dena Bank and Central Bank reported dismal performances in the quarter ended December 2015, primarily because of a steep rise in provisioning for bad loans.

Delhi-based Punjab National Bank (PNB) reported a small net profit of Rs 51 crore on tax benefit of about Rs 908 crore. It had posted a net profit of Rs 774 core in the third quarter of 2014-15. Its share nosedived seven per cent to close at Rs 87.85 on the BSE on Tuesday.

Kolkata-based Allahabad Bank posted a net loss of Rs 486.14 crore against a net profit of Rs 164.11 crore in the year-ago period. Its stock closed lower by 3.2 per cent at Rs 51 a share. Dena Bank reported a loss of Rs 662 crore against a net profit of Rs 76.56 crore in October-December 2014. Its stock was down 12 per cent at Rs 31 per share on the BSE.

PNB's Managing Director and Chief Executive Officer Usha Ananthasubramanian said industry was going through tough times and PNB has been a major lender. The impact was obviously felt on the bank's books. "The industry has been going through a tough time and PNB, being a large player, is experiencing the impact through NPAs," said Ananthasubramanian, adding that the surgery was not over.

The lender increased its provisioning and contingencies allocation to Rs 3,775.53 crore for the October-December quarter of 2015-16, a steep increase from Rs 1,467.77 crore parked aside in the corresponding quarter a year ago. The bank's asset quality deteriorated further as gross non-performing assets (NPAs) or bad loans hit 8.47 per cent of gross advances during the quarter, against 5.97 per cent a year ago. Net NPAs rose to 5.86 per cent of net advances, from 3.82 per cent.

Pressure from bad loans and provisioning would continue to be high in the quarter ending March 2016 as banks would continue to recognise and provide for bad loans, as identified in Reserve Bank of India review, PNB officials said. The bank is looking at new streams of income, including monetising real estate through a sale-and-lease model.

Allahabad Bank's total provisions, excluding for income tax, nearly doubled to Rs 1,208.15 crore against Rs 643.66 crore in the year-ago period. Gross NPAs as a percentage to total advances rose to 6.40 per cent from 5.46 per cent in the year-ago quarter. Net NPAs went up to 4.23 per cent from 3.89 per cent at the end of December 2014.

Ashwani Kumar, chairman and managing director of Mumbai-based Dena Bank, said its provisions for non-performing loans rose by Rs 807 crore year on year on fresh slippages. Total provisions and contingencies grew about four-fold to Rs 996 crore from Rs 241 crore. Gross NPAs stood at Rs 7,916 crore (9.85 per cent), up from Rs 4,229 crore (5.61 per cent). The bank has set up a "war room" to recover from NPA accounts. A team of 10 officers would track the accounts and follow up, Kumar said

Later in the evening, Central Bank of India reported a net loss of Rs 836.62 crore for the December quarter, against a net profit of Rs 137.650 crore. Its provisions and contingencies more than doubled to Rs 1,499 crore from Rs 698 crore. Gross NPAs moved up to 8.95 per cent from 6.2 per cent a year ago.