Dec quarter shows much-needed improvement in asset quality for PSU banks

Slippages ratio for FY20 pegged at 3.5 per cent a tad lower than previous year's 3.7 per cent, but MSMEs, agri and retail are segments that could see fresh stress

When State Bank of India (SBI) posted 2.7 per cent net non-performing asset (NPA) ratio in December quarter (Q3), a level last seen prior to FY16, it made many think if the demons of asset quality is well-past public sector banks (PSBs). One after another when more PSBs published their financials, it became more convincing that the asset quality stress is perhaps receding for the sector.

An analysis on 12 PSBs results for Q3 show that a majority of them have seen an improvement in asset quality, both sequentially and year-on-year, as well as profit before tax, even as the