Net interest income of the bank stood at Rs 125.32 crore, up 16.99% y-o-y. Asset quality deteriorated sharply and gross non-performing assets (NPAs) increased to Rs 722.20 crore, a jump of 48.29% y-o-y. Net NPAs stood at Rs 550.22 crore, up 70.62% y-o-y.
As a ratio, gross NPAs stood at 5.60% of gross advances, up 38 bps from the September quarter and net NPAs stood at 4.33% of net advances, up 56 bps from the second quarter.
Provisions increased to Rs 67.67 crore from Rs 20.33 crore a year ago. As a result, the banks capital-adequacy ratio fell 56 bps to 10.46% from the preceding quarter. Earlier in the month, ratings agency Brickwork Ratings downgraded the banks long-term and Tier-II bond programmes to BBB+ with a negative outlook.
Small private and public sector banks have been reporting huge drops in profit due to rising provisions made for non-performing assets and, hence, eroding their capital-adequacy ratios. Recently, United Bank of India reported a loss of R1,238 crore in Q3 due to provisions for bad loans. United Bank of Indias Tier-1 CAR stood at 5.59%, much lower than the minimum 7% under the Basel-III norms. Similarly, Dhanlaxmi Bank reported a loss of R119 crore in the third quarter and its gross NPAs hit an all-time high of 7.05% of the loan book.