Bad loans declined further in December quarter, says Care Ratings
- The gross NPA ratio of SCBs improved to 7% in the quarter ended December from 9.3% in the year-ago period and 7.7% in the September quarter which was largely driven by PSBs
MUMBAI: The reported gross bad loans of banks declined to Rs7.5 trillion in the quarter ended December from Rs8 trillion in Q2 of FY21, Care Ratings said on Tuesday.
Gross non-performing assets (NPAs) of public sector banks (PSBs) contracted between December 2018 and December 2020. Among PSBs, State Bank of India (SBI) which accounts for the highest share at around 20% of the gross NPAs of state-owned banks in Q3 FY21, reported the highest asset quality improvement, with a decline in bad loan to 4.8%, followed by Punjab National Bank (PNB) accounting for around 16% share which also posted lower bad loan ratio at 13% in December 2020.
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“Similarly, net NPAs of scheduled commercial banks (SCBs) also shrank to Rs.2 trillion in Q3 FY21 from ₹3.2 trillion in Q3 FY19 reflecting an increase in provision coverage ratio (PCR)," the report said.
The gross NPA ratio of SCBs improved to 7% in the quarter ended December from 9.3% in the year-ago period and 7.7% in the September quarter which was largely driven by PSBs.
The report said on an overall basis, state-owned banks, accounting for around 78% share of gross NPAs of all banks, have experienced a drop in the gross NPA ratio to 8.7% in the quarter ended December 2020 against 11.3% in the year-ago period.
“As per the financial disclosures made by the SCBs, loans written-off accounted for more than ₹32,000 crore in the quarter ended December-2020, this has led to an improvement in the asset quality (GNPA reduction) of the SCBs. Wherein, SBI wrote off Rs.9,986 crore, followed by Union Bank of India, Bank of Baroda, Axis Bank, IDBI Bank, ICICI Bank and Canara Bank," it said.
The asset quality improvement, Care Ratings said, was also supported by recoveries made by banks (SBI: ₹5,657 crore, ICICI Bank: ₹1,776 crore, Union Bank of India: ₹1,554 crore, Bank of India: ₹1,495 crore, Bank of Baroda: ₹1,471 crore, Canara Bank: ₹890 crore, Indian Bank: ₹744 crore, Central Bank of India: ₹631 crore and Axis Bank: ₹621)
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