PSBs’ Q4 losses cross Rs 60k cr-mark

By: | Published: May 31, 2018 3:56 AM

Losses posted by the 21 state-owned lenders, in the three months to March, crossed the Rs 60,000 crore-mark with Indian Overseas Bank (IOB) posting a Rs 3,607 crore loss on Tuesday.

PSB, PSB q4, State Bank of India, Union Bank of India, SDRThe high losses have left some banks with capital that is barely sufficient to meet the regulatory norms and consequently little growth capital. (Reuters)

Losses posted by the 21 state-owned lenders, in the three months to March, crossed the Rs 60,000 crore-mark with Indian Overseas Bank (IOB) posting a Rs 3,607 crore loss on Tuesday. The high losses have left some banks with capital that is barely sufficient to meet the regulatory norms and consequently little growth capital. This would restrict their lending,
especially to high risk corporate borrowers. The losses of public sector banks in Q4FY18 have stemmed largely from slippages,or exposures that turned bad during the quarter, for which lenders were required to make provisions.

Many of these exposures related to accounts for which lenders had initiated a strategic debt restructuring (SDR) but had failed to implement. Gross NPAs for the 21 banks shot up 45% year-on-year (y-o-y) to nearly Rs 9 lakh crore. Simultaneously, increased provisioning for loan losses, mark-to-market (MTM) losses in bonds and gratuity-related requirements led to a 140% surge in provisions to Rs 1.29 lakh crore.

Yet, the pain may be far from over, with a chunk of stressed power exposures sitting on the watchlists of banks. There is a fair chance that some of these may slip in Q1FY19. State Bank of India (SBI) alone, for example, has Rs 10,575 crore worth of loans to the power sector under watch. Mid-sized lender Union Bank of India told analysts earlier this months that it may see slippages worth Rs 5,000-6,000 crore in the power sector in FY19.

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