Monday, 30th October 2017

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Asset woes cloud bank earnings

While RBL Bank reported rise in bad loans and provisions, Axis Bank witnessed an uptick in slippages

  • Published 23.01.20, 1:18 AM
  • Updated 23.01.20, 1:18 AM
  • 2 mins read
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In terms of asset quality, while the percentage of gross non-performing assets to total loans rose to 3.33 per cent from 2.60 per cent on a sequential basis, the gross NPAs in absolute terms rose to Rs 2010.48 crore from Rs 1539.10 crore in the year-ago period (Shutterstock)

Asset quality woes followed lenders into the December quarter of 2019 with RBL Bank reporting a rise in bad loans and provisions and Axis Bank recording an uptick in slippages.

For RBL Bank, as provisions for bad loans surged to Rs 638.29 crore against Rs 160.68 crore in the year-ago period and Rs 533.30 crore in the preceding three months, its net profit slumped 69 per cent. Net profit of the private sector bank came in at Rs 69.9 crore against Rs 225.2 crore in the same period a year ago.

For Axis Bank, though its gross NPA levels were stable compared with the preceding second quarter, slippages rose. The lender saw fresh NPAs of Rs 6,214 crore during the third quarter compared with Rs 4,983 crore on a sequential basis and Rs 3,746 crore a year ago.

Slippages from the loan book were at Rs 5,124 crore and that from investment exposures (to an housing finance company) at Rs 1,090 crore.

Around 81 per cent of its corporate slippages came from previously disclosed BB and below-rated clients.

RBL asset quality

In terms of asset quality, while the percentage of gross non-performing assets to total loans rose to 3.33 per cent from 2.60 per cent on a sequential basis, gross NPAs in absolute terms rose to Rs 2,010.48 crore from Rs 1,539.10 crore in the year-ago period. However, slippages, or the accretion of fresh bad loans, declined during the quarter to Rs 1,048 crore from Rs 1,377 crore in the corresponding year-ago quarter.

“Challenges in a few corporate accounts and related provisioning requirements have impacted the bottomline for the quarter. We are digesting this short-term pain and are looking to put this behind us over the next few months,” Vishwavir Ahuja, MD and CEO of RBL Bank, said.

Axis NPA

Gross non performing assets (GNPA) at Axis Bank improved to 5 per cent of the gross advances from 5.75 per cent a year ago. In value terms, gross NPAs stood at Rs 30,073 crore in the December quarter against Rs 30,854.67 crore in the same period last year.

The bank’s net profit rose around 5 per cent to Rs 1,757 crore compared with Rs 1,680.85 crore in the corresponding quarter last year.

Its top management told reporters at a conference call that the ratio of BB and below rated companies have declined to 0.9 per cent of its gross customer assets compared with 1.1 per cent in the previous three months.

During the quarter, the total exposure of the bank to these companies stood at Rs 9,783 crore. During the third quarter, there was an increase in the non-fund based exposure to such clients and this was driven by one significant downgrade of a telecom firm.