By Mitali Salian
The combined profit of 17 private sector banks, which have so far reported their March quarter earnings, fell by 14.4% quarter on quarter to `10,388.14 crore in the three months ended March from `12,131.79 crore in Q3FY19 amid a sharp 40.7% rise in aggregate provisions.
On a year-on-year basis, the aggregate profit rose 29.1%, with Q4FY18 profit being `8,043.28 crore while provisions stood at `18,765.2 crore for Q4FY18, down 4.2% on-year. Aggregate operating profits stood at `32,858.9 crore for quarter ended March, up 10.4% on quarter from `28,351.84 crore in Q3FY19 and up 10.02% on year from Rs 27,986.8 in March 2018.
Provisions for Q4FY19 stood at `16,423.12 crore, against `12,173.49 crore for Q3FY19 and `18,429.6 crore for March last year. The rise at aggregate level was largely on account of YES Bank that witnessed a 565.48% quarter-on-quarter rise in provisions, followed by IDFC First Bank that saw a 228.5% rise in provisions.
In a post-earnings analyst call, the YES Bank management said it has taken a ‘one-time proactive’ or contingency provisioning of about Rs 2,100 crore, which was accounted for in the fourth quarter results. The private sector bank also made a Rs 1,270-crore specific loan losses provisions during the quarter.
On the contingency provisioning, YES Bank senior group president Rajat Monga said, “This contingency provisioning essentially relates to our assessment of the bank’s credit portfolio, which is predominantly centered in the below-investment grade rating horizon and should be constituting about 20% provisioning equivalent of the loan book that we are watching for in terms of risks in the part of the credit portfolio.”
IndusInd Bank that announced its results on Wednesday registered a 157.24% rise in provisioning, the third largest among peers, on the back of a `1,273-crore provisioning in the fourth quarter against its exposure to IL&FS.
For the quarter ended March, IndusInd Bank classified `3,004 crore of infra assets within the IL&FS group as NPAs and provision for exposure to IL&FS holding company increased to 70% and to IL&FS operating companies/special purpose vehicle to 25%.
Private and public sector banks alike have witnessed stress on the asset quality front owing to their exposure to the ADAG group, the Essel group, some entities from the IL&FS group and Jet Airways.
Aggregate gross and net non-performing assets, meanwhile, saw little change quarter-on-quarter. GNPAs and NNPAs for Q4FY19 stood at Rs 128,745.4 crore and `50,016.16 crore, down 0.4% and 0.3%, respectively, on quarter, against `129,199.5 crore and Rs 50,168.4 crore for Q3FY19. Year-on-year, GNPAs were up 2.5% while NNPAs fell 27.2%.
IndusInd Bank was among the lenders that clocked the highest rise in gross NPAs, followed by YES Bank and IDFC First Bank. IndusInd’s GNPA rose 100.6% on quarter to stand at Rs 3,947.4 crore, while YES Bank’s GNPAs were up 52.8% Q-o-Q and those for IDFC First Bank grew 27.8%.
On the asset quality of IDFC First Bank, analysts at Edelweiss Research said, “Q4FY19 was characterised by higher asset quality stress with GNPL rising… Major disappointment was continued addition to the corporate book, despite earlier write-off and clean up by erstwhile IDFC Bank (standalone) prior to the merger, which remains key monitorable. Further slippages came form realignment of
NBFC to bank norms, which could be a one-time hit. Sustained volatility in the asset quality needs to be arrested to improve investors’ confidence.”