Pvt banks pip PSBs in bad loan exposure

Private sector banks which have cut down their credit exposure continue to outperform state-owned banks in terms of bad loans exposure.

A comparison between 14 private sector banks operating in the country and 25 state- owned banks shows the former have better numbers in terms of net non-performing assets (NNPA) growth during April-June 2009.

But in the case of private sector banks, NNPA to total advances ratio at the aggregate level showed an increase during April-June 2009, against that of April-June 2008, and in the case of PSBs, NNPA to total advances ratio also showed an increase but marginal. But the ratio was higher in magnitude in private sector banks compared to PSBs during both the time period.

The aggregate total income of 14 private sector banks have increased by 13.4% from Rs 22,400 crore in April-June?08, to Rs 25,408 crore in April-June?09.Their total NNPA has increased by 15.7% during the study period, increasing the NNPA to total advances ratio from 0.97% in April-June ?08 to 1.25% in April-June?09.

State-run banks, in contrast, appeared less concerned about bad loans. It has achieved a 28.9% growth in total income during April-June ?09 and the NNPA has increased by 31.5% to Rs 21,764 crore during April-June ?09 from Rs 16,545 crore during April-June 2008. And the NNPA to total advances ratio increased from 0.79% to 0.89% in April-June ?09.

Significant increase in the ratio was seen in the case of Vijaya Bank. The NNPA to total advances ratio of Vijaya Bank increased from 0.68%in April-June?08 to 1.58% in April-June ?09. In Union Bank, the ratio increased significantly from 0.15% in April-June?08 to 0.72% in April-June ?09.

The largest PSB, SBI registered an increase of 33.4% in NNPA where as largest private sector bank namely ICICI Bank showed 14.2% increase in NNPA.

Among private sector banks, DCB showed significant increase in the ratio.The NNPA to total advances ratio rose from 1.52% in April-June ?08 to 4.96% in April-June ?09. Similarly, in the case of ING Vysya Bank,the ratio improved from 0.84% to 1.27% in April-June ?09.

One interesting thing is that all private banks except five showed a rise in NNPA during April-June 2009, while 72% of PSBs showed an increase in the NNPA during the same period.