Bad loans of listed banks soar 38% in first half of FY14

Share of top 10 banks in net NPAs has come down to 67.8% in Sept

The net bad assets of the 40 listed banks have jumped 38 per cent to Rs 1,28,533 crore during the first half this financial year, from Rs 93,109 crore at the end of the last financial year, and are likely to cross Rs 1.5 lakh crore by the end of this year, says a study by NPAsource.com, a portal.

Of the total 40 listed banks, 14 have reported more than 50 per cent jump in their net non-performing assets (NPAs) during these six months, according to the study. “The share of the top 10 banks in net NPAs has come down to 67.8 per cent in September from 70 per cent in March. Net NPAs of seven banks were higher than 3.5 per cent at the September quarter, as against none at the March quarter,” it says.

“Net NPAs in the banking system is likely to touch Rs 1.5 lakh crore by March 2014, as two more quarters are remaining in the current financial year and the situation is worsening every quarter,” Devendra Jain, chairman and managing director of the portal, said.

Gross NPAs for the 40 listed banks as of the September quarter stood at Rs 2,29,007 crore, 27 per cent higher, compared to Rs 1,79,891 crore as of the March quarter. According to the study, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 140 per cent during the same period.

During the second quarter, top public sector banks like State Bank of India (SBI), Bank of Baroda, Punjab National Bank, Central Bank, IDBI Bank and Union Bank have all reported more than 30 per cent rise in net NPAs.

For SBI, net NPAs rose 2.91 per cent from 2.44 per cent in the second quarter. However, on a sequential basis, NPAs of the nation's largest lender came down by 39.23 per cent. The rising provisions for bad assets pulled down the net profit of the bank by 35.03 per cent.

“With interest rates expected to remain high at least for the remaining financial year and the economy and corporates in poor shape, banks have a tough road ahead,” he added. Jain said more pressure on NPAs would come in next two quarters, as many restructured loans of last year would get converted to NPAs.