Tag: public sector bank

Canara Bank Q2 net jumps 200% to ₹1,333 crore

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Canara Bank reported a 200 per cent year-on-year (y-o-y) jump in second quarter net profit at ₹1,333 crore against ₹444 crore in the year-ago period, supported by healthy growth in other income and lower loan loss provisions.

Net interest income (difference between interest earned and interest expended) was down a shade at ₹6,273 crore (₹6,305 crore in the year ago period).

Non-interest income, comprising fee-based income, trading income, recovery in written-off accounts, and others, was up 37.54 per cent y-o-y at ₹4,268 crore (₹3,103 crore).

Loan loss provisions declined 24 per cent y-o-y at ₹2,678 crore (₹3,533 crore).

Slippages and recovery

Fresh slippages during the quarter increased by ₹6,525 crore (₹4,253 crore in the preceding quarter). This includes ₹3,200 crore exposure to the SREI Group.

The public sector bank made higher cash recovery of ₹3,002 crore (₹1,598 crore in the preceding quarter). Upgradation and write-offs amounted to ₹2,671 crore (₹2,292 crore) and ₹1,585 crore (₹2,574 crore), respectively.

Gross non-performing assets (NPAs) position improved 8 basis points to 8.42 per cent of gross advances against 8.50 per cent as on June-end 2021.

Net NPA position improved 25 basis points to 3.21 per cent of net advances against 3.46 per cent as on June-end 2021.

LV Prabhakar, MD & CEO, observed that going forward, the bank’s balancesheet will strengthen further, with gross non-performing assets (excluding transfer of stressed assets to the National Asset Reconstruction Company) expected to decline to at least 7.5 per cent by March-end 2022 and credit growth (global) projected at 7.5 per cent for FY22, seen picking up steam from third quarter onwards.

The bank recovered about ₹1,700 crore from DHFL’s corporate insolvency resolution process (CIRP) and made 50 per cent provision towards its exposure to the SREI Group, which has become a non-performing account, Prabhakar said.

Net interest margin declined to 2.72 per cent from 2.82 per cent as on September-end 2020.

Global (domestic plus overseas) gross advances grew about 6 per cent y-o-y to ₹6,86,813 crore.

Within domestic advances (which were up 5.71 per cent yoy), Agriculture & Allied advances grew by 13.92 per cent; retail (10.46 per cent); MSME (0.31 per cent); and corporate and others (2.23 per cent). Overseas advances increased by 9.36 per cent yoy.

Global Deposits rose about 9 per cent to ₹10,32,536 crore. Domestic deposits and overseas deposits increased by 7.61 per cent and 38.15 per cent, respectively.

The proportion of low-cost CASA deposits improved to 34.11 per cent in total domestic deposits as at September-end 2021 against 32.77 per cent as at September-end 2020.

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Bank of Baroda bets on super app, BFSI News, ET BFSI

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Mumbai: Bank of Baroda will position its new digital platform bob World as the main bank and all banking channels will be an adjunct to the primary platform. The public sector lender is adopting a strategy similar to SBI, which is working to integrate all services on its Yono platform.

Bank of Baroda MD & CEO Sanjiv Chadha told TOI that post-pandemic, the bank has seen a surge in digital transactions and twice the number of branch visits are happening on the app. “So rather than being an adjunct to the bank, it will be the bank and the other parts of the lender will become an adjunct. The thought was to enable everything that can be done in the branch within the app,” said Chadha.

“The way the app (bob World) is positioned, you can save, borrow, invest and pay. All four capabilities are in the app and are being scaled up every day. In addition to regular transactions, we are having things like airline ticket booking and comparison shopping across merchants to bring the cheapest proposition to the customers,” said Chadha. The bank plans to extend use of the app from retail to businesses as well.

For the financial inclusion and to reach out to people who do not have digital access, the bank is also doubling the number of business correspondents to 50,000.

“It’s a matter of great pride for us that while we have a 6-7% share in banking. Our share in Jan Dhan Yojana is 15%. We have a very aggressive programme for increasing our business correspondent and increase their number from two for every branch to five BCs for every bank branch that we have,” said Chadha. The bank will however not be increasing its headcount as it has realised some efficiencies following the amalgamation of Vijaya Bank and Dena Bank, which will enable the lender to redeploy staff.



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Indian Bank reports fraudulent NPA accounts worth ₹305 cr to RBI, BFSI News, ET BFSI

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Indian Bank, Public sector lender has informed the exchanges that it has declared two non performing asset (NPA) accounts worth over ₹300 crore as fraud and reported them to the Reserve Bank of India (RBI).

The nature of fraud in both the cases has been defined as “Diversion of funds” by the lender.

“In terms of Sebi regulations and having regard to the Bank’s policy on determination and disclosures of material events/ information, we have to inform you that two NPAs accounts have been declared as fraud and reported to RBI as per regulatory requirement,” Indian Bank said in a filing.

The NPA accounts, related to Kiratpur Ner Chowk Expressway Ltd and Tantia Constructions Ltd, are worth ₹172.73 crore and ₹132.41 crore respectively.

On Thursday, Indian Bank’s scrip closed flat at ₹131.95 on NSE.

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PSBs may have to provide for over Rs 21,000 crore annually for family pension revision, BFSI News, ET BFSI

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Public sector banks will have to make an additional provision of over Rs 21,300 crore annually on account of a hike in family pension and higher contribution toward the National Pension System (NPS), according to a report.

A special dispensation will be sought from the Reserve Bank of India (RBI) to allow provisions over the next five years, it said.

The plan

Acknowledging that family pension for bank employees is at a paltry level, the government this week had announced that it would raise the same to 30% of the last drawn salary.

Earlier, kin of a deceased PSB employee used to get a maximum of Rs 9,284 per month as a family pension, said Department of Financial Services Secretary Debasish Panda.

“The cap has been completely removed and a uniform slab of 30% at the last-drawn salary will be entitled as family pension,” Panda told reporters here, admitting that the earlier levels were “paltry”.

NPS hike

Similarly, the ministry has also decided to increase the employer’s contribution to the New Pension Scheme (NPS) to 14% of the salary from the current 10%, he said.

Finance Minister Nirmala Sitharaman expressed her satisfaction at public sector banks’ performance in the past few years and appreciated that many of them have come out of the RBI’s prompt corrective action framework.

Panda said a dozen PSBs have become leaner and started delivering profits which have upped the investor confidence in them and made them self-dependent for capital raising.

He said that since last year, the banks have collectively raised over Rs 69,000 crore, including Rs 10,000 crore in equity, and are in the process of raising another Rs 12,000 crore at present.

As on March 31, the total number of pensioners stood at around 5.66 lakh and family pensioners at over 1.55 lakh.



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Start credit outreach scheme from Oct, BFSI News, ET BFSI

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Start credit outreach scheme: FM to banks | page 1
FM Nirmala Sitharaman has asked bankers to begin a credit outreach programme from October, meet industry bodies, exporters and help to promote one product for export from each district.

FM to banks: Start credit outreach scheme from Oct | page 9
Mumbai: Finance minister Nirmala Sitharaman has asked bankers to begin a credit outreach programme from October. They have also been asked to meet industry associations and exporters, and help to promote one product for export from each district.

“To keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit,” she said, addressing a press conference after her review meetings with bank chiefs in Mumbai on Wednesday. The finance minister referred to the 2019 ‘loan melas’ undertaken by banks across 400 districts to promote credit in retail, agriculture & MSME (referred to as RAM).

“Approximately Rs 4.9 lakh crore was disbursed as part of this outreach between October and March 2019. This year, too, there will be a credit outreach in every district of the country,” said Sitharaman. She pointed out that it was too early to conclude that there is a lack of demand for credit and the festive season would see a natural pickup.

“In the context of fintechs, I have highlighted to banks two aspects — the advantages to banks of technology, and also meeting the needs of fintech as a sector,” she said. The public sector banks have also been asked to come up with a plan for credit flow to eastern states with high deposits and low credit offtake.

The finance minister was all praise for public sector banks, which she said have done well financially by recording profits and coming out of the Reserve Bank of India’s prompt corrective action framework. They have also managed to raise capital from the market even as they serviced government schemes during the pandemic without going off track in their amalgamation process. Before the pandemic, the government had announced the merger of 10 public sector banks into four, which has since been completed.

On the divestment of stake in public sector insurance companies, the finance minister said that the government has decided to have a minimal presence in the insurance sector.



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Corporate lending by major PSBs declines

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In what could be a matter of concern in rekindling the Covid-hit economy, corporate lending by major public sector banks has been on the wane.

The Q1 data of banks show a significant decline of corporate advances compared to the year-ago period.

For instance, State Bank of India’s domestic corporate advances decreased 2.23 per cent at ₹7,90,494 crore in the quarter ended June 30, 2021, compared to ₹8,09,322 crore in the same quarter last year. However, in the first quarter of FY21, SBI reported 3.41 per cent growth in corporate advances.

According to SS Mallikarjuna Rao, Managing Director and CEO, Punjab National Bank: “Corporate growth was almost muted or negative” during the quarter. For PNB, corporate advances marginally decreased by 0.57 per cent at ₹3,264,66 crore in June 2021 compared to ₹3,28,350 crore in the year-ago period.

For Union Bank of India, the share of industry exposure in domestic advances fell to 38.12 per cent at ₹2,40,237 crore from 39.4 per cent at ₹2,47,986 crore in the year-ago period. The same is the case with Indian Bank which saw a 3 per cent dip in the corporate loans during the period under review.

According to a senior SBI official, the last one year saw the complete ‘impact’ of the pandemic on some key investment decisions of the industry.

“In fact, banks, including SBI, have been proactively supporting the industry wherever possible. Assuming that there will be no third wave, we can see greenshoots, going forward,” he added.

As per RBI data, up to May, the gross loans to large industries declined by 1.7 per cent on a year-on-year basis.

Demand low

There has also been lower demand from corporates in general as many adopt a wait-and-watch approach on investments, say bankers. Obviously, there has been a more rigorous due diligence on the part of the banks.

However, banks are optimistic about the future as far as corporate lending is concerned. Even though the corporate lending growth was muted in the first quarter, PNB is bullish. “We are looking at a good amount of growth, whereas corporate growth was almost muted or negative. But we are looking at a good amount of growth that will to be disbursed over a period of time,” said Mallikarjuna Rao in a recent earnings call.

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Central Bank of India reports standalone net profit of ₹206 crore

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Central Bank of India (CBoI) is back in the black, reporting a standalone net profit of ₹206 crore in the first quarter (Q1 FY22) on the back of healthy growth in net interest income (NII) and a substantial decline in loan loss provisions.

The public sector bank had reported a net loss of ₹1,349 crore in the fourth quarter of FY21. It posted a net profit of ₹135 crore in Q1 FY21. Net interest income/NII (difference between interest earned and interest expended) rose 41 per cent quarter-on-quarter (q-o-q) to ₹2,135 crore (₹1,516 crore in Q4 FY21).

Also read: PSBs vacating branches open doors for other lenders

However, NII in the reporting quarter was a tad lower vis-a-vis year-ago period’s (Q1 FY21) ₹2,146 crore.

Non-interest income, NPA

Total non-interest income, comprising commission, exchange & brokerage, treasury income and recoveries in written-off accounts, was down 15 per cent q-o-q at ₹767 crore (₹902 crore). But it was up 8 per cent up on year ago period’s ₹710 crore. Non-performing asset (NPA) provisions declined 98 per cent q-o-q to ₹ 76 crore (₹3,259 crore in Q4 FY21). On yoy basis too, NPA provisions fell 85 per cent. Standard assets provisions increased to ₹240 crore against a write-back of ₹ 152 crore in Q4FY21 and a provision of ₹182 crore in Q1 FY21.

Also read: Mastercard to file an independent audit report

Provisions towards restructured accounts jumped to ₹328 crore against ₹32 crore in Q4FY21 and ₹20 crore in Q1FY21. Write-back in provisions on investments was higher at ₹105 crore against ₹37 crore in Q4 FY21. In the year ago period, the Bank made a provision of ₹282 crore. Net interest margin (annualised) improved to 2.84 per cent from 2.04 per cent in Q4FY21.

Total deposits increased by 3.18 per cent y-o-y to ₹3,31,483 crore (₹3,21,252 crore in Q1FY21), with the proportion of current account, savings account (CASA) in total deposits improving to 49.20 per cent (47.30 per cent). Total advances declined 0.72 per cent yoy to ₹1,75,229 crore (₹1,76,496 crore), with retail, agriculture and MSME (RAM) advances growing 4.69 per cent and corporate advances declining 9.55 per cent.

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Employees’ union voice concerns against privatising BoM

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Bank of Maharashtra’s (BoM) employees’ union wants the government to maintain the public sector character of the bank in the backdrop of the problems that two private sector banks – YES Bank and Lakshmi Vilas Bank – and a host of urban co-operative banks (UCBs) faced in the recent past.

“Customers are scared of private sector banks, more particularly after the YES Bank episode. In Maharashtra, Punjab and Maharashtra Co-operative Bank customers have suffered a lot.

“The Reserve Bank of India (RBI) has cancelled the licence of Subhadra Local Area Bank (Kolhapur) from private sector and Shivam Sahakari Bank (Ichalkaranji, Kolhapur) and The Karad Janata Sahakari Bank (Karad) from UCB sector,” said Devidas Tuljapurkar, General Secretary, All India Bank of Maharashtra Employees Federation (AIBoMEF), in a statement.

He emphasised that the RBI and government should have initiated steps to repose stakeholders’ confidence in the banking system.

Referring to the government’s announcement that it will privatise two public sector banks in FY22, Tuljapurkar said this announcement has triggered speculation in the market and created confusion in the minds of customers.

According to reports, the government could weigh privatisation of Indian Overseas Bank (IOB), Bank of Maharashtra (BoM), Bank of India (BoI) and Central Bank of India (CBoI). It may zero-in on two of these four banks for privatisation.

“Bank of Maharashtra is identified with the common man and is showing extraordinary performance. Financials of the bank are strong.

“The unions in the bank are proactive and will continue their efforts in pursuing the government to maintain its public sector character,” said Tuljapurkar.

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Banks in Gujarat to stay shut for 4 days in March, BFSI News, ET BFSI

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If you have an account with a public sector bank, then avoid scheduling your banking activities between March 13 and March 16.

Around 55,000 public sector bank employees from 18,000 branches from across Gujarat are planning to participate in the nationwide bank strike on March 15 and 16, according to the MahaGujarat Bank Employees’ Association.

With March 13 being a second Saturday and March 14 being a Sunday, banks are expected to remain shut over the weekend.

The United Forum of Bank Unions, an umbrella body of nine unions, has given a call for the two-day strike against the proposed privatization of two-state owned lenders.

In an UFBU meeting held in Hyderabad on Tuesday, various announcements made in the union budget regarding reform measures like privatization of IDBI Bank and two public sector banks, setting up a bad bank, disinvestment in LIC, privatization of one general insurance company, allowing FDI in insurance sector up to 74%, aggressive disinvestment and sale of public sector undertakings.

On February 19, a day-long dharna will be held by bank employees in all state capitals whereas relay demonstrations will be held from February 20 to March 10 across various towns and districts of Gujarat. According to bankers, the strike will bring transactions worth at least Rs 60,000 crore to a standstill.



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PNB on track to achieving proit of ₹ 2,000 crore this fiscal despite Covid-19 challenges

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Punjab National Bank, Inida’s second largest public sector bank, is confident of recording profits in the fourth quarter as well as achieving the overall indicated profit of ₹2,000 crore for the current fiscal despite pandemic induced challenges, Ch. SS Mallikarjuna Rao, Managing Director & CEO, has said.

The public sector bank is also confident of keeping the gross NPA level as a percentage of advances below 14 per cent and net NPA level below 5 per cent by end-March this fiscal, Rao told a virtual press conference on Saturday, after the announcement of the Q3 financial performance.

It maybe recalled that PNB senior management had at end of September this fiscal guided for gross NPA of less than 14 per cent and net NPA of 5 per cent by end March 2021.

“We still retain that (guidance). While challenge has been there for Q3 and SC judgement is holding back on identification of NPA, January 2021 appears to be better in terms of collections. We are very confident we will be able to control. Our effort will be to maintain at the same level as we have declared today…but the stress in the system for which we have done provisioning, we would like to see that stress removed in Q4,” he said.

Although the Supreme Court is yet to pronounce final judegment on the NPA recognition matter, PNB has made an assessment, and based on that made adequate provisioning in the financial statements for the quarter ended December 31, 2020, he said.

As of end December 2020, PNB had gross NPA of 12.99 per cent and net NPA of 4.03 per cent. This was lower than the gross NPA of 13.43 per cent and net NPA of 4.75 per cent in September 2020.

On Friday, PNB reported a net profit of ₹506 crore for the third quarter ended December 31, 2020. For the first half this fiscal, PNB had reported a net profit of ₹929 crore.

“We are looking at market conditions to optimise the profitability in terms of credit and treasury,” he said, exuding confidence of good fourth quarter performance. “If you look at the performance of PNB in last three years, it is slowly and steadily coming to profitability in terms of business and strengthening of asset quality,” he said.

Bad bank

Rao said that the concept of a bad bank was welcome initiative. He that the proposed initiative is going to be a facilitator to bring all the approvals for the bidder at one go and that it is going to be a single window process.

In his view, the bad bank at the initial stage will only see “transfer” of assets from the lender and will not be a “purchase” transaction. “Because this is only a transfer of assets, I don’t expect any bottlenecks. Within one year bad bank will get settled and attain maturity,” he said.

Although the Finance Ministry has categorically said that government will not infuse any capital in the bad bank, Rao felt that capital requirement will only be moderate and the banks themselves will be able to fork this out. “Capital requirement will arise only when bad bank purchases from the banks. It will not be a purchase as I understand it will be a transfer which will not require capital at the higher level. It will require moderate capital,” he said.

Engaging with investors

Rao indicated that PNB would begin engaging with investors to gauge the appetite for further qualified institutional placement (QIP) from Monday. It maybe recalled that PNB had in December 2020 raised ₹3,788 crore via QIP, which fell short of the announced targeted mop up of ₹7,000 crore. “We will do the remaining portion of QIP at an appropriate time. It could happen even before this fiscal end,” he said.

Rao also said that PNB would raise Additional Tier 1 (AT-1) capital of ₹2,500 crore before end March.

Till date, PNB has raised ₹8,283 crore out of the ₹14,000 crore capital that it last year set out to raise from the market. Rao also said that PNB is not looking to seek any capital support from the government and would look to “stand on its own legs” and mobilise capital from the market.

As regards plans for life insurance companies which it has invested in and whether the bank would review shareholding now that FDI limit has been raised to 74 per cent in budget, Rao said that no such immediate plans are there on this front.

PNB chief pointed out that both PNB MetLife (PNB holds 30 per cent) and CHOICE (PNB holds 23 per cent) are unlisted companies, and would first be required to be listed to discover the right enterprise valuation.

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