State Bank of India (SBI) on Friday joined Bank of Baroda, Punjab National Bank and ICICI Bank in the list of lenders that have seen their bad loans swell more than 100 percent over a period 12 months. The four banks had a combined bad loan portfolio of Rs. 1.23 lakh crore (about $18.46 billion) as on March 31, 2016, marking a rise of 115 percent over Rs. 57,310 crore (about $8.56 billion) as on March 31, 2015.
The course correction initiated by the Reserve Bank of India (RBI) to clean the books of banks saw many of them making substantial provisioning for bad loans and thereby taking a hit on their profits.
State Bank of India
The country's biggest bank by assets reported its fourth-quarter results on Friday and they were on expected lines. The Mumbai-based lender's bad loans net of provisioning (net non-performing assets, or NPAs) doubled to Rs. 55,807 crore from Rs. 27,590 crore. The bank's full-year standalone net profit was Rs. 9,950 crore in 2015-16, down sharply from Rs. 13,101 crore in 2014-15.
Bank of Baroda
Bank of Baroda saw its net NPAs balloon to Rs. 19,407 crore by March 2016 from Rs. 8,069 crore at the end of the preceding accounting year. The bank reported net loss of Rs. 5,396 crore in 2015-16 as against net profit of Rs. 3,398 crore in 2014-15.
In the December 2015 quarter, Bank of Baroda became the first Indian bank to report the highest quarterly loss of Rs. 3,342 crore in the history of Indian banking.
Punjab National Bank
The state-run bank's net NPAs increased 131 percent to Rs. 35,423 crore at the end of 2015-16 from Rs. 15,396 crore a year ago. As a percentage of total advances, net NPAs stood at 8.61 percent, up from 4.06 percent as on March 31, 2016.
The New Delhi-based bank created history on the lines of Bank of Baroda by reporting the largest quarterly loss by an Indian bank. Its fourth-quarter loss was Rs. 5,367 crore as against a net profit of Rs. 306 crore for the quarter ended March 2015.
India's largest private-sector lender saw its net NPAs rise 107 percent to Rs. 12,963 crore at the end of 2015-16 from Rs. 6,255 crore in the preceding financial year. For the quarter ended March 2016, ICICI Bank's standalone net profit plunged to Rs. 702 crore from Rs. 2,922 crore in the year-ago period. A massive hike in provisioning for bad loans to Rs. 7,381 crore, including a one-time provision of Rs. 3,600 crore, caused the slump. It said the extra provisioning was a result of the bank's exposure to stressed sectors.
"The weak global economic environment, the sharp downturn in the commodity cycle and the gradual nature of the domestic economic recovery has adversely impacted the borrowers in certain sectors like iron and steel, mining, power, rigs and cement. While the banks are working towards resolution of stress on certain borrowers in these sectors, it may take some time for solutions to be worked out, given the weak operating and recovery environment," said the bank in a statement.
"In view of the above, the bank has on a prudent basis made a collective contingency and related reserve of Rs. 3,600 crore ($543 million) during Q4-2016 towards exposures to these sectors. This is over and above provisions made for non-performing and restructured loans as per RBI guidelines," it added.
Strangely, the share prices of all the four banks rose on Friday. SBI closed with a gain of 6.42 percent at Rs. 195.55, PNB was up 2.68 percent at Rs. 76.65, Bank of Baroda closed 2.78 percent higher at Rs. 138.70 while ICICI Bank ended the session at Rs. 243, a marginal gain of 0.96 percent.