Gross NPAs of private lenders up 55% to Rs 35,772 cr in Sept quarter

With banks' earlier indications of their bad-loan situation being under control, the markets were expecting a stable asset quality profile for the September quarter. However, this has been hit by the Reserve Bank of India's recent diktat in this regard.

Gross NPAs for seven private banks which have declared their quarterly results so far rose 55 per cent over a year before to Rs 35,772 crore by end-September. Compared to the June quarter, these were up 20 per cent.

RBI told banks to reclassify some major loans as NPAs for FY17 and make provision. Two private lenders, Axis Bank and Lakshmi Vilas Bank, were hit significantly in the September quarter 2017 by this directive. By the rule, if RBI's assessment of bad debt numbers for a financial year differs from the bank's assessment by more than 15 per cent, the total divergence should be disclosed.

Provisions and contingencies, predominantly the amount set aside for NPAs, grew only 3.6 per cent to Rs 4,508 crore over a year before. On a sequential basis, banks have had to set aside a substantial amount for bad loans, up 30 per cent from Rs 3,459 crore in the June quarter to Rs 4,508 crore.

The lion's share of this was Axis Bank's, given its large balance sheet. Its provisioning rose to Rs 3,140 crore, from Rs 2,341 crore at end-June. South Indian Bank saw a 253 per cent rise in provisioning, to Rs 453 crore from the Rs 224 crore in the earlier quarter. Another south-based small bank, Lakshmi Vilas, also had to face consequences of the RBI decision. Its bill grew sequentially by 199 per cent, to Rs 187 crore.

The net profit of banks in this pack were down 36 per cent to Rs 1,743 crore by end-September, from Rs 2,719 crore at end-June. The year-on-year rise was 10 per cent, from Rs 1,572 crore.

Net interest income rose 1.8 per cent, to Rs 8,693 crore from end-June (9.6 per cent growth from a year before.