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Who is Eating Our Money? – Bank of Baroda Posts Highest Ever Loss in Industry – Jaitley Promises Helping Hand for Losing Banks

Who is Eating Our Money? – Bank of Baroda Posts Highest Ever Loss in Industry – The country’s second largest lender by assets said its provisions for bad loans grew to Rs 6,474 crore, nearly five times more than Rs 1,149 crore in Q3 last year.

download (1)Public sector lender Bank of Baroda (BoB) posted highest-ever quarterly loss by an Indian bank of Rs 3, 342 crore in the quarter ended December 2015 on account of an almost five times increase in provisions for bad loans. It had posted net profit of Rs 333 crore in the same period last year.

The bank’s net interest income for the quarter declined to Rs 2,795 crore from Rs 3,286 crore a year ago. Other income, comprising items like fees and treasury, was flat at Rs 1, 112 crore in Q3 FY16, compared with Rs 1, 090 crore in Q3 FY15.

The country’s second largest lender by assets said its provisions for bad loans grew to Rs 6,474 crore, nearly five times more than Rs 1,149 crore in Q3 last year.

BoB’s earnings came a day after State Bank of India, India’s top lender by assets, reported its biggest fall in quarterly profit in nearly five years because of a jump in bad loan provisions. Public sector lenders account for about 85 per cent of banking sector’s troubled assets.

On Friday, Andhra Bank and Canara Bank reported dramatic falls in profits and IDBI Bank slumped to a loss. Andhra Bank’s October-December profit stood at Rs 34.46 crore, down 83 per cent from Rs 201.71 crore in the same period last year. Provisioning for bad debt rose to Rs 905.56 crore from Rs 541.52 crore in the corresponding quarter of the previous year. The bank’s gross non-performing assets (NPAs) rose to seven per cent from 5.99 per cent in the year-ago period.

Canara Bank reported an 87 per cent drop in net profit to Rs 84.9 crore, year on year, from Rs 655.9 crore. Its gross NPAs rose to 5.84 per cent from 3.35 per cent. In absolute terms, its gross NPAs rose to Rs 19,813.44 crore by the end of December from Rs 10,573.57 crore a year ago.

IDBI Bank posted highest-ever quarterly loss by an Indian bank at Rs 2,183.68 crore in October-December, against a net profit of Rs 102.79 crore in the same period of last year. Its gross NPAs increased to 8.94 per cent from 5.94 per cent in the year-ago period.

However, finance Minister Arun Jaitley said there was no need for panic and investors should consider the economy’s inherent strength. The banks are going to take all steps possible to recover loans from debtors,” Jaitley said in a video uploaded on the finance ministry’s YouTube channel.

“The bankruptcy law is under active consideration. The government is also considering steps to empower banks to recover these monies. It’s a problem which will soon come under control,” Jaitley said.

“The government is committed to supporting public sector banks by providing whatever capital requirements because these banks have played an important role in supporting the economy,” he added.

Jaitley also spoke on the mayhem in global markets and said that was the primary reason for the sell-off on Indian bourses. “There could be several reasons, the uncertainty over the Fed rate or what’s happening in Europe or the slowdown anticipated in China. These factors will remain and will have to be tackled by those economies,” the minister said.

Source: Business Standard

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