The FE study indicates that the growth of sticky loans of private banks was higher than that of public sector banks (PSBs), especially during the second quarter of the current fiscal. The net non-performing assets (NNPA) of 15 private banks increased 40.4% in the July-September 2008 period. NNPAs of 24 PSBs that constituted the sample, on the other hand, rose 9%.
Also, gross non-performing assets (GNPA) of private banks increased 47.7% during the study period. GNPA of PSBs, on the other hand, declined 0.5%.
Among PSBs, Punjab National Bank and State Bank of Patiala took the lead in cutting down on NPAs. While PNB saw a 33.8% decline in GNPAs, State Bank of Patiala registered a 20.9% dip in the second quarter as compared to the same period in the previous fiscal.
Things also look bright for PSBs on the NNPA-to-advances ratio front. The ratio is considered a better indicator of asset quality and performance. In the second quarter, their NNPA-as-a-percentage-of-advances fell to 0.75%, from 0.86% in the same quarter last fiscal.
Though the ratio decreased for private sector banks as wellit was 1.00%it remained higher than that for PSBs. An industry analyst said, "The economic slowdown has impacted income levels negatively. Since private banks have been more aggressive in selling personal, car and credit card loans, they are more exposed to risks."
NNPA of 24 public sector banks that were part of the study increased from Rs 15,176 crore to Rs 16,539 crore for the second quarter year-on-year. Indian Overseas Bank and State Bank of Mysore registered the highest increase in NNPA among PSBs.
The country's largest bank-SBI registered a growth of 13.5% in sticky loans during the second quarter. Its NNPA increased from Rs 5,831 crore in July-September 2007 to Rs 6,618 crore in July-September 2008.
NNPA of the 15 private banks that constituted the study increased from Rs 4,703 crore in the second quarter last fiscal to Rs 6,604 crore year-on-year.
Karur Vysya Bank, HDFC Bank and ICICI Bank saw a substantial increase in their NNPA numbers.
Among private banks, ICICI Bank increased its NNPAs-to-net-advances ratio from 1.43% in to 1.91% in the second quarter year-on-year; the same ratio for HDFC Bank rose from 0.40% to 0.60%.