Non-performing assets, an indicator of the banking industry?s health, have risen more in public sector banks (PSBs) compared with the private lenders during April-June quarter, according to an FE study. The net non-performing assets (NNPA ) of 14 private banks decreased by 23.5% during the period as against a rise of 43.8% for 25 PSBs.

Milind Gadkari, GM, CARE Ratings, said, ?Private sector banks had traditionally focused on high return, short-medium term, unsecured retail lending products, personal loans and credit cards. Therefore, they faced relatively higher NPAs as compared to PSBs. However, post September 2008, private banks contracted their retail lending and stepped up their recovery processes, thereby controlling increase in NPA levels. PSBs, on the other hand, reported higher slippages especially from the restructured assets leading to an increase in GNPAs/ NNPAs in the recent quarters.?

Gross non-performing assets (GNPA) of private banks increased 7.4% as against 37.2% of PSBs. Among the PSBs, Indian Bank registered highest rise in GNPA, followed by Bank of India.

The average NNPAs to net advances ratio of 25 PSBs rose to 1.05% in April-June 2010 from 0.89% in the year-ago period. In private banks, the ratio decreased from 1.30% to 0.80% during the period.

In absolute terms, NNPA of 14 private banks dipped from Rs 7,244 crore in April-June 2009 to Rs 5,538 crore in April-June 2010. Among the private banks, Jammu & Kashmir Bank reported the maximum drop in NNPA, followed by YES Bank. YES Bank?s key strength has been its ability to maintain a healthy asset quality, despite the strong balance sheet growth in past years. During Q1FY11, GNPA of the bank declined 2.8% year-on-year and NNPA fell 63.5%.

For PSBs, NNPA increased from Rs 13,926 crore to Rs 20,026 crore. Indian Bank, Punjab National Bank and State Bank of Travancore registered the maximum NNPA among the nationalised banks. State Bank of India, however, has not declared the sticky loans figures so far.

Among private banks, NNPA of ICICI Bank decreased from Rs 4,608 crore to Rs 3,456 crore during the period. Net non-performing assets to net advances ratio of ICICI Bank from 2.33% in the corresponding quarter last fiscal to 1.87% in April-June 2010 and in ING Vysya Bank, it rose from 1.27 % to 1.36%. Top three private banks according to the ratio of NNPAs to advances are DCB, ICICI Bank and ING Vysya Bank.

Among the PSBs, PNB increased its NNPAs to net advances ratio from 0.19% to 0.66% and Indian Bank from 0.19% to 0.76%. The top three PSBs according to the ratio of NNPAs to advances are Indian Overseas Bank, Bank of Maharashtra and Dena Bank.

The highest increase in NNPA during April-June 2010 was reported by Federal Bank among private banks and Indian Bank among the PSBs.