The total stressed assets (4.46% as a percentage of net customer assets) improved on sequential basis (5.46% in Q2FY17).
The total stressed assets (4.46% as a percentage of net customer assets) improved on sequential basis (5.46% in Q2FY17). The gross and net NPA ratios rose considerably q-o-q – 5.22% vs 4.17%, and 2.18% vs 2.02% respectively. The provision coverage ratio including technically written-off accounts increased qoq to 64% from 60%.
Demonetisation negatively impacted the already weaker credit growth. Overall advances growth moderated to 10% y-o-y and -1.7% q-o-q in Q3FY17. The retail loan book remained flat sequentially, while SME and large corporate book both decreased sequentially.
This lacklustre credit growth in Q3 led the management to indicate that FY17 credit growth would be lower than earlier guidance of 18%-20% growth. Core PPOP came down 15% y-o-y to R31.1bn, 6.5% below our estimates, with the higher than estimated NII more than offset by higher expenses.
Provisioning was 4.3x of third quarter Q3FY16 provisioning, with annualised credit cost (provision for NPA/net customer assets) for the quarter being 433bps.