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Bad loans, weak earnings haunt PSU banks; shares tumble 11%

Investors continued to desert state -run lenders with stocks plunging by up to 11 percent Thursday amid concerns over mounting bad loans and disappointing earnings reported by them.  


Bad loans, weak earnings haunt PSU banks; shares tumble 11%

Mumbai: Investors continued to desert state -run lenders with stocks plunging by up to 11 percent Thursday amid concerns over mounting bad loans and disappointing earnings reported by them.

Shares of Oriental Bank of Commerce dipped 11.06 percent on the BSE, followed by United Bank of India 7.61 percent, Allahabad Bank 6.94 percent, Bank of India 5.96 percent, Central Bank of India 4.06 percent, Indian Overseas Bank 4.01 percent, PNB 4 percent, Union Bank of India 3.26 percent, SBI 2.99 percent and Dena Bank 2.08 percent.

Consequently, the BSE bank index fell by 3.81 percent to end at 15,889.92.

Some of these banks had fallen by over 12 percent yesterday also.

State-run OBC today reported a net loss of Rs 424.6 crore for the third quarter ended December 31, due to significant jump in bad loans. The bank had earned a net profit of Rs 19.56 crore in the same quarter last year.

Gross NPAs as a percentage to total advances rose significantly to 7.75 percent from 5.43 percent in the same quarter year ago. Public sector United Bank of India reported 59.31 percent decline in net profit to Rs 17 crore for the December quarter.

The bank had posted a net profit of Rs 41.78 crore in the third quarter of the previous fiscal.

Bank of India reported a net loss of Rs 1,505.58 crore for the third quarter ended December 31, on account of higher provisioning for bad loans.

The bank had a net profit of Rs 1,733.80 crore in the October-December quarter of the last fiscal.

Gross non-performing assets of the bank as a percentage of total advances rose to 9.18 per cent during the quarter as against 4.07 per cent last fiscal.

State-owned Union Bank of India reported 74 percent decline in net profit at Rs 78.5 crore for the third quarter of the current fiscal.

The bank had posted net profit of Rs 302.42 crore for the third quarter of last fiscal, 2014-15.

Gross NPAs as a percentage to total advances rose significantly to 7.05 percent from 5.08 percent in the same quarter a year ago.

State Bank of India posted 67 percent decline in consolidated profit to Rs 1,259.49 crore for the third quarter ended December 31, 2015-16, on account of higher provisioning for bad loans.

The total provisioning for non-performing assets jumped significantly to Rs 7,644.52 crore during the December quarter, up from Rs 5,327.51 crore in the corresponding period last fiscal.

Meanwhile, in the broader market the BSE Sensex plunged by 807.07 points or 3.40 percent to end at 22,951.83.

From Zee News

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