As their combined bad loans top Rs 1.23 lakh cr, Bank of Baroda reports a loss of Rs 5,053 cr for fiscal 2016, UCO Bank Rs 2,799 cr, Central Bank Rs 1,418 cr and Allahabad Bank Rs 743.71 cr
Corporate loans sanctioned without proper scrutiny have come home to roost as dismal earnings continue to hit profitability of banks.
On Friday, four public sector banks that have announced the results so far for the financial year 2015-16 have notched up a total loss of Rs 10,013 crore and about Rs 1,23,704.56 crore of bad loans on their books.
Second-largest public sector bank by assets, Bank of Baroda, has reported a loss of Rs 5,053 crore during the financial year, while Kolkata-based UCO Bank posted a loss of Rs 2,799.25 crore. Central Bank reported an annual loss of Rs 1,418.18 crore during 2015-16 while Allahabad Bank, Rs 743.71 crore.
The quarterly performances were equally dismal. Total loss of the four state-owned banks during the quarter ended March 31 added up Rs 5,700 crore, led by quarterly loss of Rs 3,230 crore of Bank of Baroda, Rs 1,715 crore loss of UCO Bank, Rs 581.13 crore of Allahabad Bank and Rs 898.04 crore loss from Central Bank of India.
Union Bank of India was the only bank among the five state owned banks to report profit. The bank which reported a profit of Rs 96.12 crore but it was a fall of 78.34% from the year-ago period as the bank set aside more money to cover the risk of loan default and earned less interest and non-interest income.
For Bank of Baroda, it was the worst quarter with the reporting highest quarterly net loss of Rs 3,230 crore against net profit of Rs 598.35 crore in the corresponding quarter a year ago as the management had guided on a lower accretion of bad loans, but incremental bad loans during the quarter was over Rs 1,587 crore. If it was not for a tax writeback of Rs 1,055 crore, the loss would have been higher. Analysts on average had expected a net profit of Rs 303 crore, according to data compiled by Thomson Reuters.
P S Jayakumar, managing director & CEO of Bank of Baroda, said, "The year 2015-16 has been one of transformation addressing NPAs. We are excited by the transformation journey we have embarked on, which will give us leadership position in the banking and financial services sector."
Gross non-performing assets as a percentage of total loans increased to 9.99% or Rs 40,521 crore for the quarter ended March 2016 from 9.68 % in the sequential quarter ended December 2015. In a clean-up exercise, the bank provided Rs 6,857 crore, up 277%, against Rs 1,817 crore in the same quarter last year.
UCO Bank on Friday reported a net loss of Rs 1,715.16 crore for the March quarter due to high provisions and low net interest income and other income. This was the second consecutive quarter when the bank reported a net loss. The bank had reported a profit of Rs 209.28 crore a year ago.
Allahabad Bank on Friday reported a net loss of Rs 581.13 crore for the March quarter due to higher provisions and lower net interest income. The loss capped with a tax write0back of Rs.1,032.77 crore in the March quarter, compared with a tax expense of Rs.175.05 crore in the year-ago period.
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