Rising bad loans have taken a toll on profitability of lenders, with several banks including BoB, Dena Bank, OBC and Kotak Mahindra Bank reporting a drop in net profit for the quarter ended June 2015.
Of the six banks that posted their quarterly numbers today, only State Bank of Mysore saw a slight jump in net profit.
Earlier this week, PSBs such as Punjab National Bank, Union Bank of India and Syndicate Bank had reported lower net profits due to a surge in bad loans.
Private lender Kotak Mahindra Bank, which merged ING Vysya Bank with itself effective April 1, reported a 25.8 per cent decline in net profit at Rs516.57 crore for the quarter under review.
The gross NPAs as a percentage of total advances rose to 2.04 per cent, from 1.56 per cent in the year-ago period. The net NPAs too increased to 0.93 per cent, from 0.81 per cent.
Provisions and contingencies of the bank during the quarter climbed more than 10-fold to Rs321.90 crore as against Rs27.24 crore a year earlier.
Among major public sector banks, Bank of Baroda’s net profit fell 23 per cent to Rs1,052 crore in the June quarter, dragged down by a fall in treasury income and higher staff expenses.
The bank had reported a profit after tax of Rs1,362 crore in the same period last year.
Another public sector lender Dena Bank’s net profit plunged by one-fifth to Rs15.16 crore in the said quarter compared with Rs81.52 crore in the year-ago period.
The asset quality of the bank worsened as gross non-performing assets (NPAs) or bad loans shot up to 6.2 per cent of advances during the quarter under review as against 4.21 per cent a year ago.