 "Dena Bank's stressed loan watch list of Rs 12,000 cr; to go slow on branch expansion")
After booking a loss of Rs 935 crore in 2015-16 on heavy provisioning for bad loans, Dena Bank has kept stressed loans of Rs 12,500 crore on a "watch list", to contain more slippage.
Ashwani Kumar, chairman and managing director of the government-owned lender, said beside restructured credit (of a little over Rs 4,000 crore), loans under an intense scanner are SMA-II accounts (about Rs 8,000 crore). The latter, Special Mention Accounts, are those exhibiting early warning signals, in between the standard and sub-standard (non-performing assets or NPAs) categories. SMA-II covers accounts where interest or principal is overdue for 61 to 90 days. These require special attention to reverse a. slippage to NPA status.
"The proportion of loans slipping into NPAs from the restructured category is 25-27 per cent. The rate of slippage is not expected to increase in 2016-17," Kumar told reporters.
Dena Bank posted a net loss of Rs 326.4 crore in the March quarter (Q4), against a net profit of Rs 55.8 crore in Q4 of FY15. Its stock closed three per cent lower on Monday at Rs 29 a share on the BSE.
Its gross NPAs were Rs 8,560 crore (almost 10 per cent) at end-March, from Rs 4,393 crore (5.45 per cent) a year before. Its provisioning for NPAs grew to Rs 2,724 crore in FY16 from Rs 1,114 crore in FY15. Provision coverage was 52.8 per cent.
Referring to the sharp rise in the cost to income (CI) ratio, the bank chief said it reflected the rapid expansion of branch network in the past three years. The bank opened about 300 branches in this period. It is go slow on this in 2016-17 and concentrating on earnings from the new branches. The CI went up to 71 per cent for FY16 from 58 per cent in FY15.
The plan is to increase non-interest income and reduce operating costs and targets to achieve a CI of 62 per cent in this financial year.