Dena Bank's stressed loan watch list at Rs 12,000 cr

The bank decides 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 accounts require special attention to reverse their downward movement i.e. slippage to non-performing accounts. "The% of loans slipping into NPAs from restructured category is about 25-27%. The rate of slippages was not expected to increase in 2016-17", Kumar told reports.

Mumbai-based Dena Bank posted net loss of Rs 326.38 crore in Q4 of FY16 as against net profit of Rs 55.82 crore in Q4 of FY15. Its stock closed three% lower at rs 29 per share on Bombay Stock Exchange today.

Its gross NPA stood at Rs 8,560 crore (9.98%) at end of March 2016 from Rs 4,393 crore (5.45%) a year ago. Its provisions for NPAs grew over two fold to Rs 2,724 crore in Fy16 from Rs 1,114 crore in Fy15. The provision coverage ratio was 52.79%.

Referring to sharp rise in cost to income (C) ratio, bank chief said it reflects the rapid expansion of branch network in last three years. Bank opened over 300 branches in last three years. Now it would go slow ion opening branches in 2016-17 and concentrating on earnings from new branches.

Its C ratio went up to 71.03% for Fy16 from 58.02% in Fy15. Bank has planned to increase Non-Interest Income and reduce operating costs and targets to achieve Cost Income Ratio of 62% in FY 2015-16.