Indian Banks' Net Interest Income Rises, but Bad Debt Worries Persist

Strategic Insights -

The net interest income of listed Indian banks rose modestly in the September quarter, but their bad debt woes continue to cast a shadow. For 14 publicly traded banks outside state control, net interest income rose by 3.54% year-on-year, while for 24 state-run listed banks, it increased by 3.19%. However, state-owned banks' net profit plummeted nearly 25% in the quarter, whereas private banks' net profit rose by over 7%. This disparity can be attributed to the state-owned banks' higher provisioning for bad assets, which rose by nearly 21% to Rs.22,435 crore from Rs.18,571 crore in the year-earlier quarter. Private banks, on the other hand, saw a nearly 19% decrease in provisioning in the same period.

Key Takeaways:

  • State-owned banks' gross NPAs rose by 6.27% to Rs.3.04 trillion in the September quarter, while private banks' gross NPAs increased by 5.98%.
  • Gross NPAs of listed banks in the September quarter rose by 6.24% to Rs.3.37 trillion from Rs.3.17 trillion in the year-earlier quarter.
  • 15 out of 24 listed public-sector banks now have at least 5% or more gross NPAs, with Indian Overseas Bank topping the list at 11%, followed by United Bank of India and Uco Bank.
  • 12 state-owned banks saw a rise in gross NPAs in the September quarter over the year-ago period, while four private banks' gross NPAs fell.
  • Four listed public-sector banks now have more than 5% net NPAs, and 15 have more than 3% net NPAs.
  • 11 of 14 listed private banks displayed a rise in net NPAs, while two listed public banks' levels remained unchanged.

Statistics:

  • Net interest income of 14 publicly traded banks outside state control rose by 3.54% year-on-year.
  • Net interest income of 24 state-run listed banks increased by 3.19% year-on-year.
  • State-owned banks' provisioning for bad assets rose by nearly 21% to Rs.22,435 crore from Rs.18,571 crore in the year-earlier quarter.
  • Private banks' provisioning decreased by nearly 19% in the same period.
  • Gross NPAs of listed banks in the September quarter rose by 6.24% to Rs.3.37 trillion.
  • Indian Overseas Bank's gross NPAs stood at 11%.
  • United Bank of India and Uco Bank had gross NPAs of 8.9% and 8.51%, respectively.
  • 15 listed public-sector banks now have at least 5% or more gross NPAs.

Sources:

  • Mint's research bureau
  • Fitch Ratings report
  • HT Syndication
  • HT Media Ltd.