PSU bank losses narrow further in Q2 of FY19

Mumbai, Nov 27: The collective loss of public sector banks has narrowed further to Rs 14,743 crore in the second quarter of FY19 from Rs 16,614 crore in the first quarter. The number of banks reporting a net profit has remained unchanged at seven.
As against this, private sector banks reported a consolidated net profit of Rs 10,800 crore with HDFC Bank’s bottom line of Rs 5,005 crore accounting for half of the sector’s profits. In the first quarter, private banks had collectively reported a net profit of Rs 9,914 crore. In Q2, Kotak Mahindra was the only other bank to report a quarterly net profit in four digits at Rs 1,141 crore.
The second quarter results reaffirm what most PSU bank chiefs have been asserting — bank bad loans peaked in the quarter ended March 2018 when the collective losses of public sector banks hit Rs 62,681 crore, resulting in PSU banks ending FY18 with losses of over Rs 87,000 crore. The highest profit among public sector banks was reported by SBI at Rs 945 crore. The state-owned lender had reported a loss of Rs 4,876 crore in the first quarter.
Bank of Baroda, which reported a net profit of Rs 528 crore — the highest in the first quarter — generated a profit after tax of Rs 425 crore in the second quarter. Canara Bank came in third with a net profit of nearly Rs 300 crore. Punjab National Bank topped the list of loss-making banks with a net loss of Rs 4,532 crore followed by IDBI Bank which saw losses increase to Rs 3,602 crore. TOI has compared consecutive quarters instead of a year-on-year comparison as the numbers from the corresponding period in the previous year are not comparable since new rules on bad loans came into force from February 2018.
Besides ageing provisions on bad loans, banks also had to make additional provision towards depreciation of their bond portfolio. Some of these provisions are expected to be reversed in the fourth quarter, given that bond prices have risen in recent weeks.
According to rating agency Crisil, public sector banks are expected to report consolidated losses of about Rs 50,000 crore for FY19 as against Rs 87,000 crore last year. This will be the third consecutive year that the 20 state-owned banks will be reporting a collective loss. According to banks, provisions for power loans and ageing provisions make up for some recoveries in the second half.