Bad loans mount, three govt banks post losses

New Delhi: Three public sector banks, namely Central Bank of India   , Allahabad Bank   and Dena Bank   , reported losses while Punjab National Bank   posted a sharp decline in profit for the third quarter of 2015-16, due to sharp rise in bad loans.

The situation has raised concerns over the precarious state of the financial sector.

Central Bank of India reported a loss of Rs 836.62 crore for October-December 2015-16, against a profit of Rs 137.65 crore in the third quarter of the previous fiscal.

The asset quality worsened with the gross non-performing assets (NPAs) rising to 8.95 per cent of the gross advances during the quarter, as against 6.2 per cent year ago.

As a result, bank's provisions and contingencies more than doubled to Rs 1,499.05 crore as of December 2015, as against Rs 645.44 crore a year ago.

Similarly, Dena Bank reported a loss of Rs 662.85 crore for the third quarter as against net profit of Rs 76.56 crore in the same quarter last year.

Gross NPAs as a percentage to total advances rose significantly to 9.85 per cent from 5.61 per cent in the same quarter year ago, Dena Bank said in a statement.

Total provisions, excluding for income tax, rose four fold to Rs 966.97 crore as against Rs 241.33 crore in the year-ago period. Following the quarterly announcement, Dena Bank's scrip nosedived by over 12 per cent after the company reported dismal numbers.

The trends available from the December-end quarter results, announced on Tuesday, and ICICI Bank's performance pointed towards tough times for other lenders as well following the Reserve Bank of India's bad loan clean-up drive.

Analysts expect bank profitability to remain under stress for at least one more quarter as RBI has given lenders two quarters to provide adequately for loans that are under pressure.

News24 Bureau