Mumbai: Finally some banks have shown signs of decline in their NPA ratio, this decline was seen in two or more successive quarters.
According to Care Ratings, 13 banks have witnessed a decline in their non-performing asset (NPA) ratio in the last two or more quarters. Banks like Andhra Bank, Canara Bank, Indian Overseas Bank (IOB), Punjab National Bank (PNB), State Bank of India (SBI) and Vijaya Bank have witnessed lower ratios in the past two quarters.
The Care Rating report titled ‘Some trends in NPA movement’ said, “This (decline) is a positive for the PSB group.” The report pointed out that only two public sector banks (PSBs) — Vijaya Bank (5.86 per cent) and SBI (9.95 per cent) — have NPA ratio of less than 10 per cent. Lenders like Federal Bank and City Union have managed to keep their gross NPA ratio in and around 3 per cent for the last few quarters.
“Dhanlaxmi Bank and Laxmi Vilas Bank have witnessed an increase in the NPA ratios in the last two quarters. For the latter, it is above 10 per cent. In case of Karur Vysya Bank the ratio has been increasing and peaked at 7.7 per cent in Q2 FY19.” Karnataka Bank has reined in this ratio to less than 5 per cent just like South Indian Bank.
Gross NPA ratio of IOB and Dena bank— is still above 20 per cent in Q2 FY19— is at 24.73 per cent and 23.64 per cent.
“The emerging trends in the movement of NPAs when viewed along with the provisions made by banks do indicate that the NPA cycle may have peaked and that the recognition issue has by and large been addressed. This is evidenced from the declining NPA ratios for most banks. There would however still be some banks whose NPA ratios would have to be monitored closely for another two quarters,” the report added.
