Provisioning woes take toll on 4 PSBs; Canara, Dena, United banks in red

Following the RBI's new rules for restructuring of such assets, all banks had to change the status of some of their standard stressed assets, classifying these as NPAs in the quarter

Hit by a sharp rise in provisions for loans gone bad, four public sector lenders — Canara Bank, Allahabad Bank, United Bank of India and Dena Bank – posted a net loss in the final quarter (January-March or Q4) of 2017-18.

Following the Reserve Bank of India’s new rules (issued February 12) for restructuring of such assets, all banks had to change the status of some of their standard stressed assets, classifying these as non-performing assets (NPAs) in the quarter. This pushed their tally and of the related provisioning.  

  

Canara, largest among these four, reported a net loss of Rs 48.6 billion, as against a net profit of Rs 2.1 billion in the same quarter a year before. For all of 2017-18, it had a net loss of Rs 42.2 billion, compared with a net profit of Rs 11.2 billion in 2016-17.

The Bengaluru-based lender raised its provisioning for NPAs to Rs 87.6 billion in the quarter, up from Rs 29.2 billion in Q4 of FY17 as bad assets ballooned, according to a regulatory filing. Asset quality worsened, with gross NPAs rising to 11.84 per cent of gross advances by end-March from 9.63 per cent by end-March 2017. Its net NPA ratio was 7.48 per cent, from the earlier 6.33 per cent.

Mumbai-based Dena Bank, already under a Prompt Correction Plan (PCA) of the RBI, saw its net loss widen to Rs 12.2 billion in the March quarter, against a net loss of Rs 5.75 billion in Q4 of 2016-17. Sequentially, the loss widened from Rs 3.8 billion in the third quarter of 2017-18.

For the entire 2017-18 year, Dena has posted a net loss of Rs 19.2 billion, against one of Rs 8.6 billion for 2016-17. Gross NPAs rose to 22.4 per cent of gross advances as on March 31, from 16.27 per cent as of end-March 2017. Net NPAs were 11.95 per cent, from 10.66 per cent.

Kolkata-based Allahabad Bank posted a net loss of Rs 35 billion for the quarter, due to a more than three-fold rise in provisioning. It had booked net profit of Rs 1.1 billion for Q4 of FY17. For the entire financial year, a net loss of about Rs 47 billion, against about Rs 3 billion in FY17.  Net provisions (other than tax) stood at around Rs 48 billion, against about Rs 14 billion in the same quarter a year before. The provisioning for NPAs in the qarter was Rs 51 billion, against about Rs 15 billion in the same period last year. Gross NPAs were 15.96 per cent in the quarter, against 13.09 per cent in the same period last year.

RBI allowed banks to spread mark to market losses (revaluation of assets at current prices) over four quarters and the bank used the option. During the past financial year, 43 frauds were reported by the bank, involving a total amount of Rs 15.25 billion.

Likewise, with an almost three-fold rise in provisioning, Kolkata-based UCO Bank posted a net loss of about Rs 21 billion for the quarter, as compared to a net loss of nearly Rs 5.9 billion in the same period of FY17. For all of FY18, a net loss of about Rs 44 billion, against Rs 18 billion in FY17. UCO Bank’s net provisioning was about Rs 22 bn in the March quarter, against about Rs 7 billion in the period for FY17.  Of the total provisioning, that for NPAs rose to Rs 31.3 billion (Rs 15.8 billion in the earlier comparative period).  Gross NPAs increased to 24.64 per cent (17.12 per cent earlier). Net NPAs grew to 13.1 per cent (8.94 per cent).