Category: Banking & Finance

Bank of India (BoI), on Wednesday, raised ₹750 crore via Basel III-compliant Additional Tier 1 (AT-1) bonds of five year tenor at a coupon rate of 9.04 per cent.

The public sector bank, in a statement, said the AT-1 bond issue, which was on private placement basis, was over-subscribed with receipt of bids up to ₹1,017 crores against issue size of ₹750 crore.

Credit rating agency ICRA, in a report, observed that the appetite of investors towards the AT-I bonds of public sector banks has improved recently with more public banks issuing AT-I bonds in FY21 compared to FY20.

If banks can raise a part of the ₹43,000-crore capital through AT-Is and market sources, it could reduce the Government of India’s (GoI) recapitalisation burden for the coming fiscal, the agency added

Bank of Baroda (BoB) reported a standalone net profit of ₹1,061 crore in the third quarter against a net loss of ₹1,407 crore in the year-ago quarter.

A 69 per cent decline in provision towards bad loans and bad debts written-off and 55 per cent increase in trading gains helped boost the bottomline.

Provision towards bad loans and bad debts written-off was at ₹2,080 crore (₹6,621 crore in the year-ago quarter) and trading gains were at ₹925 crore (₹596 crore).

The net profit in the reporting quarter was, however, down 37 per cent compared with the preceding quarter’s ₹1,679 crore.

Net interest income (the difference between interest earned and interest expended) was up 9 per cent year-on-year (yoy) to ₹7,749 crore (₹7,132 crore).

Non-interest income, comprising total fee income, dividend income, trading gains, recovery from technically written-off accounts, increased 6 per cent y-o-y to ₹2,896 crore (₹2,738 crore).

Bad loans decline

Gross non-performing assets (GNPAs) declined ₹2,516 crore during the reporting quarter.

GNPAs declined to 8.48 per cent of gross advances as of December-end 2020 against 9.14 per cent as of September-end 2020.

Net NPAs declined to 2.39 per cent of net advances as of December-end 2020 against 2.51 per cent as of September-end 2020.

With proforma slippages (adjusted for the Supreme Court’s interim order), Gross and Net NPA ratio would have been 9.63 per cent and 3.36 per cent, respectively.

Sanjiv Chadha, MD & CEO, said: “We do recognise the fact that going ahead some stress will play out in the MSME and retail loan book. But we do believe that going ahead the credit costs which might accrue on this account will be offset by lower credit costs from the corporate book.

“We believe that we have a fair handle on the corporate book and are fairly confident about the asset quality going ahead.”

There was no fresh slippage in the reporting quarter in the domestic loan book, but there were slippages aggregating ₹3,986 crore in the international loan book.

Restructuring invoked under the Reserve Bank of India’s Covid-19 framework stood at ₹9,501 crore, with the corporate segment accounting for 82 per cent of the total restructuring. Restructuring of Retail and MSME advances were at 12 per cent and 6 per cent, respectively, of the total restructuring.

Global net interest margin (NIM) edged up to 2.87 per cent as at December-end 2020 against 2.80 per cent as of December-end 2019.

Chadha emphasised that it is the combination of retail driven loan growth and CASA (current account, savings account) driven deposit growth that has helped protect BoB NIMs in these difficult times and that is going to be fundamental principal on which the Bank will construct its business strategy going forward.

Global advances increased 6.30 per cent y-o-y to ₹7,45,420 crore. Within this, domestic advances were up 8.31 per cent on the back of growth in retail and agriculture loans (about 14 per cent each), micro, small and medium enterprises (about 9.5 per cent), and corporate (7 per cent). However, international advances declined about 4 per cent.

Global deposits rose about 6.50 per cent y-o-y to ₹9,54,561 core. Within this, domestic and international deposits were up 7 per cent and 4 per cent, respectively.

With growth in CASA, retail deposits and cash recovery, Canara Bank has posted 88.54 per cent higher profits on a consolidated basis for the third quarter of 2020-21. The bank’s profits stood at ₹749.73 crore against ₹397.65 crore posted in the same period last year.

The total income of the bank grew by 57.68 per cent at ₹24,490.63 crore against ₹15,531.80 crore recorded last year. EPS for the quarter stood at ₹5.01 against ₹5.09 posted last year.

Commenting on the Q3 performance, LV Prabhakar, the bank’s MD and CEO, said: “We saw growth in CASA deposits at 14.9 percent, retail term deposits grew by 18.2 per cent, credit – both retail and housing loans – saw a rise of 9 per cent and 13.3 per cent, respectively. Cash recovery in Q3 was at ₹2,963 crore.”

During Q3, the cost of deposit came down to 4.61 per cent (last year 5.46 per cent). Cost of funds also saw a downward trend at 4.20 per cent (last year 5.07 per cent). Yield on advances stood at 7.98 per cent (last year 8.26 per cent), yield on funds was 6.46 per cent (last year 7.09 per cent), yield on investments 6.85 per cent (7.52 percent) and NIM stood at 2.80 per cent (2.50 per cent).

The bank’s net-interest income (NII) grew by 21.47 per cent to ₹6,081 crore, while non-interest income increased by 28.64 per cent.

Canara Bank’s gross NPA stood at ₹49,988.56 crore (last year’s ₹36,860.49 crore), Net NPA stood at ₹16,796.15 crore (₹21,377.86 crore) and percentage of gross NPA stood at 7.48 per cent (8.40 per cent). Percentage of net NPA stood at 2.65 per cent (5.05 per cent). Return on assets annualised is 0.26 per cent (0.22 per cent).

GMR Hyderabad International Airport Limited (GMRHIAL) has successfully priced $300-million bond in the international bond market through a purchase agreement.

As per the agreement, it will issue and allot $300 million worth 4.75 per cent senior secured notes of five-year tenure.

GMRHIAL is a subsidiary of GMR Airports Limited and a step down subsidiary of GMR Infrastructure Limited (GMR Group),

The proceeds from the notes will be used towards the capital expenditure for the expansion of Rajiv Gandhi International Airport at Hyderabad, increasing the capacity of the airport to 34 million passengers per annum.

Grandhi Kiran Kumar, Corporate Chairman, GMR Group, said: “We are delighted on the successful pricing of this transaction. The offering through GHIAL reinforces our ability to raise funds from the international bond markets and reflects our continued effort to create value for our investors and raise capital for growth. The successful pricing of the offering underscores investors’s confidence in GMR Group and credit strength of GHIAL.”

GHIAL is promoted by the GMR Group (63 per cent), in partnership with Airports Authority of India (13 per cent), Government of Telangana (13 per cent), and Malaysia Airports Holdings Berhad Group (11 per cent).

RGIA was commissioned in 2008 with an initial capacity of 12 million passengers per annum (MPPA) and 150,000 tonnes of cargo handling capacity per annum. The project has the flexibility to increase capacity, and is currently being expanded to accommodate over 34 MPPA.

Private sector ICICI Prudential Life Insurance registered a 1.02 per cent growth in net profit at ₹305.55 crore in the third quarter of this fiscal against ₹302.46 crore in the same period last fiscal.

“New business sum assured grew by 22.2 per cent year-on-year in the third quarter this fiscal, along with expansion in new business premium by 14 per cent year-on-year in the same period,” it said in a statement on Wednesday.

The value of new business (VNB) for the quarter ended December 31, 2020, stood at ₹428 crore, increasing by 0.5 per cent from ₹426 crore a year ago.

New business premium grew by 14 per cent year-on-year in the third quarter of this fiscal to end the quarter at ₹3,443 crore, resulting in new business premium for the nine months this fiscal at ₹7,899 crore.

The insurer reported 13th month persistency of 85 per cent as on December 31, 2020, against 84.4 per cent in the previous quarter, while the 61st month persistency was at 59.6 per cent at the end of the third quarter this fiscal versus 58.8 per cent as on September 30, 2020.

Last week, HDFC Life Insurance reported a 5.8 per cent increase in net profit for the third quarter this fiscal at ₹264.99 crore against ₹250.24 crore in the same quarter of the previous fiscal,

Lending platform Revfin, in partnership with SmartE, which runs electric three-wheeler taxi fleets, has received an undisclosed amount of funding from Shell Foundation.

“The funds will be utilised for extending new loans for electric three-wheelers operating on SmartE’s platform,” Shell Foundation said in a release.

The funding will enable Revfin to demonstrate a viable asset financing model for loans for 800 drivers in Lucknow, Prayagraj and Varanasi — without any other guarantee — from manufacturers or dealers, and at interest rate of less than 25 per cent as well as more than 75 per cent loan-to-value ratio, the release added.

Revfin has its own NBFC through which it issues loans to users of its fintech platform. SmartE has a presence in passenger mobility or logistics in nine Indian cities.

Founded by Dutch oil and gas major Shell, Shell Foundation is a charity that supports business solutions towards sustainable development goals.

The Appointments Committee of the Cabinet (ACC) has approved the appointment of Swaminathan Janakiraman as Managing Director of State Bank of India, the country’s largest commercial bank.

Janakiraman, who is currently Deputy Managing Director, has been appointed as MD for three years.

ACC has also approved the appointment of Ashwini Kumar Tewari, Deputy Managing Director, as Managing Director of SBI for three years.

Both Janakiraman and Tewari are eligible for the extension of their term of office after a review of their performance, according to an order issued by the Department of Personnel & Training.

Private sector lender Axis Bank reported a 36.4 per cent drop in net profit in the third quarter of this fiscal despite a robust rise in net interest income as provisions rose sharply.

For the quarter ended December 31, 2020, Axis Bank’s standalone net profit stood at ₹1,116.60 crore against ₹1,757 crore in the same period a year ago.

“Reported profits after tax for the quarter are adversely impacted to the extent of about ₹1,050 crore on account of prudent expenses and provisioning charges during the quarter,” said Axis Bank in a statement on Wednesday.

Its net interest income (NII) grew 14 per cent to ₹7,373 crore in the third quarter of this fiscal from ₹6,453 crore a year ago.

“NII before interest reversals grew 19 per cent to ₹7,987 crore,” said Axis Bank. Net interest margin for the third quarter this fiscal was 3.59 per cent versus 3.57 per cent a year ago.

Non-interest income (comprising fee, trading profit and miscellaneous income) for the October to December 2020 quarter was roughly flat at ₹3,776 crore compared to ₹3,787 crore in the corresponding period last fiscal.

Rise in provisions

Provisions rose by 32.6 per cent to ₹4,604.28 crore in the third quarter this fiscal against ₹3,470.92 crore a year ago.

According to the bank, specific loan-loss provisions for the third quarter were ₹1,053 crore, compared to ₹2,962 crore a year ago. It has also made provisions on 90+ DPD accounts not classified as NPA pursuant to the Supreme Court judgment, at rates that would have applied to these accounts per extant provisioning rules for NPA in the banks, amounting to ₹3,899 crore during the quarter.

As on December 31, 2020, Axis Bank reported gross non-performing assets and net NPA levels at 3.44 per cent of gross advances and 0.74 per cent of net advances, respectively. Gross NPA was at 5 per cent and net NPA at 2.09 per cent as on December 31, 2019.

“The GNPA ratio as per said IRAC norms as on December 31, 2020, would have been 4.55 per cent and net NPA ratio would have been 1.19 per cent,” said Axis Bank. The restructured loans as of December 31, 2020, stood at ₹2,709 crore that translates to 0.42 per cent of the gross customer assets.