The October-December quarter proved to be a period of stable asset quality for most banks, as lenders improved recoveries. Net interest margins (NIMs) showed a decline for most banks, due to muted deposit growth in the system. Private sector banks did exceptionally well, growing their asset books, and at the same time, keeping toxic assets in check.
Public sector banks like Punjab National Bank (PNB), which were struggling with higher non-performing assets (NPAs) during the preceding quarter, improved their recovery procedures which yielded gains. PNB reported net NPAs worth R7,586 crore during the quarter, down by nearly 4% sequentially. As a ratio of total assets, net NPAs stood at 2.6%, which was about 13 basis points (bps) lower than the previous quarter. The public sector lender reported net profit worth R1,306 crore during the quarter, up 13.5% from a year ago.
Similarly, Bank of India (BoI) reported net NPA ratio of 1.97%, down 7 bps from the previous quarter. NPA dropped sequentially to 3.08% during the October-December, down by 34 bps sequentially. However, in absolute terms, BoI saw its net NPA number come at Rs 5,455 crore, up 4% sequentially.
?We are expecting net NPA to improve to 1.8% by March 31, due to better recoveries,? VR Iyer, chairman and managing director, BoI, said after the bank announced results for the December quarter. Total restructured accounts as on December 31 stood at R18,136 crore, which formed 6.47% of the total advances. As on September 30, total restructured accounts stood at R17,853 crore, the bank said. BoI added R2,206 crore worth of restructured accounts during the quarter, it said.
BoI also reported a 19bps sequential contraction in its NIMs, owing to slower deposit growth. During 3QFY2013, the overall advances for the bank registered a healthy growth by 20.0% from a year ago and stood at R2,76,486 crore, while overall deposits for the bank grew at a moderate pace of 13.6% year-on-year, to R3,49,117 crore.
The bank?s management has guided for global NIM to be around 2.6% during the fourth quarter, as they target higher domestic lending and also due to expectation of no interest reversals.
With Reserve Bank of India having reduced repo rate by 25 bps in its monetary policy last month, banks have all begun reducing their lending rates, while deposit rates remain steady. This is expected to affect margins even further, bankers noted.
ICICI Bank, HDFC Bank and Axis Bank too showed stable asset quality, with net NPA ratio at 0.76%, 0.2% and 0.3% respectively. However, private banks reported a serious fall in the current account-savings account (Casa) ratio during the quarter, owing to a fall in the current account, bankers said.
ICICI Bank reported a Casa ratio of nearly 41%, which was down 360 bps from the previous year due to muted growth in Casa deposits. The growth in Casa deposits, stood muted at 3.2% year-on-year at R1,17,137 crore. While savings deposits increased by 10.8% from a year ago, the current deposits declined by 10.9% compared with the same quarter in the previous year. HDFC Bank reported a Casa ratio of 45.4% and Axis Bank reported a 159 bps year-on-year fall in Casa ratio, which came in at 40%.
For Yes Bank, Casa deposits grew 75% from a year ago to R10,340.8 crore during the quarter, taking the Casa ratio to 18.3%. This was supported by a growth in the bank?s saving accounts deposits base, which rose by 308% year-on-year to R4,904.8 crore.
