Net NPAs for public sector banks rise in Q1

Written by Pradip Kumar Dey | Mumbai, Jul 31 | Updated: Aug 1 2008, 06:31am hrs
Rising interest rates are not only having a telling impact on the profitability of banks, but it is also creating an impact on the asset quality. The net non-performing asset or NNPA, the difference between the gross non-performing assets and the provisions made for losses, 23 public sector banks increased by 12.1% in the first quarter of FY09. The amount has swollen to Rs 14,695 crore in the period under consideration from Rs 13,110 crore in April-June 2007.

However, the banks have been active in maintaining stability in their books hence, gross non performing assets of the above number of PSBs decreased by 1.8% to Rs 32,181 crore in April-June 2008.

Some PSBs are trying to recover the NNPAs as per the RBI schemes as well as its own recovery schemes. Some banks like Union Bank (-77.5%), State Bank of Patiala (-36.0%), Andhra Bank (-31.3%) and Dena Bank (-30.8%) have reduced their NNPAs in April-June 2008. The highest recovery of Rs 376 crore was made by the Union Bank during Q1.

Speaking about this, K Ramakrishnan, CMD, Andhra Bank said : Continued focus on maintaining a healthy asset quality helped in reducing Gross NPA to Gross Advances to 1.15% from 1.52% in the first quarter of previous year while Net NPAs to Net Advances also came down to 0.10% from 0.19%.

The average NNPAs to net advances ratio, which measure of the overall quality of the banks loan book, of the 23 PSBs under study, declined from 0.89 % in April-June 2007 to 0.77% in April-June 2008. Dena Bank reduced its NNPAs to net advances ratio from 2.07% in April-June 2007 to 1.12% in April-June 2008.Indian Bank from 0.28% to 0.17%), SBI from 1.62% to 1.42%, UCO Bank from 2.54% to 1.91%, Union Bank from 0.78% to 0.15% and SB Of B&J from 1.31% to 0.96%.