Dena Bank's net loss widens to Rs 7.21 bn in Q1 on rise in NPA provisions

Dena Bank’s net loss widened to Rs 7.21 billion for the first quarter (April-June, or Q1) of this fiscal year (2018-2019 or FY19) on a sharp rise in provisions for bad loans. The public sector bank had registered a net loss of Rs 1.32 billion in Q1FY18.

Under the Prompt Corrective Action (PCA) plan, the bank’s total income fell 8 per cent year-on-year to Rs 24.1 billion.

Dena Bank is under PCA because of high bad loans. This has put it under restrictions on growing its loan book; it has to focus on recoveries, control expenses, and conserve capital.

The bank’s gross non-performing assets (NPAs) or bad loans, as a percentage of gross loans, spiked to 22.69 per cent. In the year-ago period, it was 17.37 per cent. Sequentially also, NPAs were up from 22.04 per cent in March 2018.

In value terms, NPAs rose to Rs 158.66 billion, up from Rs 129.94 billion a year ago. However, sequentially, they were down from Rs 163.61 billion in March 2018.

The net NPAs fell to 11.04 per cent (Rs 57.04 billion) year-on-year, against 11.22 per cent (Rs 77.97 billion).

The provisioning coverage for bad assets in the June quarter also increased to Rs 12.44 billion, from Rs 4.34 billion set aside in same period of 2017-18.

The overall provisions and contingencies were at Rs 11.15 billion for April-June, 2018-19, as against Rs 5.22 billion in the same period of 2017-18.

The provision coverage ratio is 65.7 per cent as on June 30, 2018.