Poor Q3 show goes on with Canara Bank's net plunging 87.05% and IDBI posting the biggest loss among the banks at Rs 2,183.68 cr on account of higher provisions
Canara Bank, the country's fourth largest public sector lender, on Friday reported an 87.05% drop in quarterly net profit to Rs 84.97 crore from Rs 655.97 crore a year ago, while the tenth-largest public sector lender IDBI posted the biggest loss among the banks so far at Rs 2,183.68 crore for the quarter ended December 31, 2015.
Both are an impact of the asset quality review by Reserve Bank of India (RBI) which had asked banks to put aside higher provisions for weak accounts.
The provisions for Canara Bank rose to Rs 1,428.85 crore from Rs 841.33 crore a year ago. The gross NPAs in absolute terms increased by 41.3% to Rs 19,813.44 crore, with 5.84% of its gross advances turning NPAs.
Rakesh Sharma, chairman and managing director, Canara Bank, said, "With the RBI initiating the clean-up exercise, we have provided for many of our weak accounts and we will build a strong balance sheet from here on.
We will have similar numbers in the next quarter."
The bank's total income also fell to Rs 12,050.6 crore for the quarter under review from Rs 12,227.86 in the year-ago period.
On Friday, the stock closed marginally up by 0.14% at Rs 172.95 a piece on the BSE.
Angel Research said in a report, "Canara Bank's advances growth was lower than the system growth at 6.3% year-on-year and also, the bank registered net interest income de-growth of 6.5% YoY. PBT de-grew by 87.1% YoY due to steep rise in provisions by 69.8% YoY.
For IDBI Bank, the provisions for the quarter stood at Rs 3,722.67 crore as against Rs 956.25 crore reported a year ago. Gross NPAs for the third quarter stood at Rs 19,615.22 crore, up 33% as compared to Rs 14,757.92 crore reported in the second quarter. Gross NPAs as a share of gross advances stood at 8.94% as on 31 December, higher than 6.92% at the end of September.
Kishore Kharat, chaiman and managing director, IDBI Bank, told at a press conference, "Half of the new NPAs are due to AQR. After this clean-up exercise, health of our bank will improve. We have also done some accelerated provisions on our own."
IDBI Bank is planning to undertake a two day review programme in Delhi next week to build a healthy and strong balance-sheet.
B K Batra, deputy managing director, IDBI Bank, said, "About 25% of our loan book is towards the infrastructure sector. Since the projects are stuck at various levels of implementation, the cash flows are insufficient to take care of the repayments."
IDBI Bank stock closed flat at 52.10 per share on BSE.
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