Private banks have low level of NPAs than PSB peers

Private sector banks have low level of non performing assets than public sector banks (PSBs). According to a study by FE, growth of sticky loans of PSBs was higher as compared to private banks during July-September quarter of 2010. The net non performing assets (NNPA) of 15 private banks decreased by 27.6% in July-September 2010 against an increase of 39.1% for 24 PSBs in the same period.

Vaibhav Agrawal, VP Research Banking, Angel Broking said: ?On y-o-y basis and q-o-q basis private banks have definitely seen considerable improvement in asset quality. In case of PSU banks net NPAs are higher on y-o-y basis but a large part of this deterioration have happened in the third & fourth quarter last year itself. The asset quality pressure for PSU banks though still present are showing sign of stabilising.?

The gross non performing assets (GNPA) of private banks increased by 9.8% against 33.9% increase in PSBs. Among PSBs, the highest increase in GNPA was registered in case of State Bank of Mysore followed by Andhra Bank.

The average NNPAs to net advances ratio of PSBs increased from 0.84% in July-September 2009 to 1.08% in July-September 2010. In case of private banks, the ratio decreased from 1.27% to 0.82% during the above period.

In absolute terms, the NNPA of 15 private banks decreased from Rs 7,276 crore in July-September 2009 to Rs 5,265 crore in July-September 2010. Among the private banks, J&K Bank showed the highest decline in NNPA followed by IndusInd Bank.

IndusInd bank?s key strength has been its ability to maintain a healthy asset quality, despite the strong balance sheet growth in past years. During Q2 FY11 GNPAs marginally increased 8% y-o-y and NNPAs fell 51.3% y-o-y.

The NNPA of ICICI Bank decreased from Rs 4,499 crore to Rs 3,145 crore during the study period.

In the case of PSBs, NNPA increased from Rs 22,714 crore to Rs 31,594 crore. The highest increase in NNPA was seen in the case of Union Bank, PNB and Indian Bank. The countries largest bank SBI?s NNPA increased by 16.9% to Rs 11,601 crore during July-September 2010.

Among private banks, ICICI Bank decreased its NNPAs to net advances ratio from 2.36% in July-September 2009 to 1.62% in July-September 2010 and Lakshmi Vilas Bank showed an increase from 1.55 % to 2.85%. The top three private banks according to ratio of NNPAs to advances in July-September 2010 are Lakshmi Vilas Bank, DCB and ICICI Bank.

Among the PSBs, Bank of Maharashtra increased its NNPAs to net advances ratio from 1.61% to 2.18% and IOB from 1.59% to 2.04%.

The top three PSBs according to the ratio of NNPAs to advances in July-September 2010 are Bank Of Maharashtra, IOB and SBI. The highest increase in NNPA during July-September 2010 was seen in Lakshmi Vilas Bank among private banks and Union Bank among PSBs.