There has been a 25 per cent rise in the non-performing assets (in absolute terms) of 26 banks that have disclosed their third quarter results. State Bank of Mysore and HDFC bank have seen a rise of over 100 per cent in their NPAs. They, however, have one of the lowest NPA levels (0.6 per cent) in the industry. NPAs are loans that fail to yield interest after a stipulated period.
Kotak Mahindra Bank and Canara Bank have witnessed a rise of 92 and 90 per cent, respectively, in their non-performing assets over the past one-year.
“NPAs have been rising from the unsecured loan segment that comprises primarily of credit cards and personal loans,” said the head of assets of a private sector bank on conditions of anonymity.
“The delinquency in the retail loans especially the unsecured loans will rise further as the GDP growth comes down,” said Amitabh Chakraborty, president, equity, Religare Enterprises. “Prudent banks have already taken steps to reduce their loans to these segments.”
Non-performing assets for Kotak Mahindra Bank went up 43 per cent over the previous quarter and 92 per cent on a year-on-year basis. NPA as a percentage of total assets has gone up from 1.1 per cent in December 2007 to 2.7 per cent in December 2008.
“It is because of the NPA’s from other banks that we have bought for our asset reconstruction business,” said Jaimin Bhatt, chief financial officer, Kotak Mahindra Bank. “It takes some time to convert these NPA’s good,” he said.
ICICI Bank occupies the second spot with non-performing assets of 2.1 per cent. ING Vysya Bank also witnessed a yoy rise in NPA of 83 per cent and a qoq rise of 41 per cent.
Most banks however arrested the quarter on quarter (qoq) rise in NPA’s in December 2008. For HDFC growth rate came down to 5 per cent and for ICICI Bank it came down to 4 per cent. The net NPA for the 26 companies rose by 4 per cent over the quarter ended September 2008.