Bad loans at Indian banks have almost doubled in the past four years as an economic slowdown took its toll on the ability of companies to repay debt, exacerbated in the case of some banks which analysts said had expanded lending too fast. Analysts expect slippages in the third quarter to come from the bank's watchlist of stressed loans, which now stands at Rs21,288 crore.
On consolidated basis, the bank posted a net loss Rs 1,886 crore in the third quarter against a net profit of Rs 1,840 crore in Q2.
A bulk Rs 10,000 crore of divergences were from the power sector and Kumar said further pain is in the offing, with high exposure to the sector. Over Rs 6,000 crore in provisions was due to the divergences.
Provisions: Credit costs or the percentage of provisioning against total advances is expected to rise because of fresh loan slippages and the bank's strategy to shore up provision coverage ratio.
Provisions for the quarter under review stood at Rs 3,426.51 crore up from Rs 2,079.50 crore for the same quarter in last fiscal.More news: Why the Grizzlies didn't trade Tyreke Evans, and why fans are mad
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Kumar, however, exuded confidence that up to 3 of these accounts will be resolved before end-March, while the rest in the first list of 12 will happen in the June quarter.
Gross non-performing assets (NPA) increased to 20.64 per cent (17.18 per cent), and net NPAs, to 10.9 per cent (8.99 per cent). The ratio of bad loans jumped to 5.61 per cent of advances from 4.24 per cent.
On the operations side, the core net interest income grew 5.17% to Rs 18,688 crore on a sequentially higher net interest margin of 2.45 per cent, while the other income plummeted 29.75% to Rs 8,084 crore on account of treasury operations.