Dena Bank Q2 net falls 55% on stressed assets

Last Updated: Sun, Nov 10, 2013 06:25 hrs

Dena Bank, Mumbai-based public sector lender, has posted 55.19 per cent drop in the net profit at Rs 107.38 crore for the second quarter ended September 30, on sharp rise in provisions for stressed assets.

The net profit for the second quarter of 2012-13 stood at Rs 239.64 crore. The net interest income for the quarter rose by just 4.7 per cent to Rs 625.17 crore.

The provisions, excluding tax and contingencies, for the quarter more than tripled to Rs 335.19 crore from Rs 104.5 crore in July-September 2013.

The asset quality deteriorated with net slippages of Rs 210 crore in the reporting quarter. The tally of gross non-performing assets rose to Rs 1,968 crore (three per cent of assets) from Rs 1,757 crore (2.7 per cent) at end of June 2013.

Ashwani Kumar, chairman and managing director, said the bank has initiated close monitoring of borrowal accounts to prevent slippages. At present, the bank is monitoring all accounts above Rs 10 crore on daily basis.

Its deposits were up by 12.11 per cent to Rs 93,669 crore as on September 30, while advances increased 10.54 per cent to Rs 65,664 crore.

Dena Bank is targeting credit growth of 17 per cent and deposit growth of 14 -15 per cent. It expects to maintain net interest margin (NIM) in the range of 2.75-3 per cent for FY14, he said.

Its capital adequacy under Basel III norms stood at 10.21 per cent at end of September 2013.

UBI incurs loss of Rs 489.5 cr

State-run lender United Bank of India (UBI) on Saturday said it incurred a loss of Rs 489.5 crore for the quarter ended September 30, as provisions almost quadrupled on account severe deterioration in asset quality.

The bank had earned a profit of Rs 144.6 crore in the corresponding period of last year. Provisions and contingencies increased to Rs 987.4 crore in July-September period from Rs 258.6 crore a year earlier. This was primarily on account of increase in bad loans. Gross non-performing assets (NPAs) increased sequentially by Rs 2,284 crore.

The gross bad loan ratio deteriorated sharply by 364 basis points year-on-year, to 7.52 per cent at the end of September.

The net NPA ratio also increased to 5.39 per cent at the end of the second quarter from 1.95 per cent in the corresponding period of last year. The bank now has one of the worst non-performing asset ratios in the industry.

Net interest income, or the difference between interest income and interest expense, fell by almost 15 per cent from a year ago to Rs 516.7 crore in July-September period.

J&K Bank net up 12.3%

Jammu & Kashmir (J&K) Bank on Saturday said its net profit for the quarter ended September 30 increased by 12.3 per cent from a year earlier to Rs 302.7 crore, as it earned more interest income, improved its margin and kept asset quality stable.

Net interest income, or the difference between interest income and interest expense, grew by 23.4 per cent from a year ago to Rs 681.8 crore during the three-month period. Net interest margin improved 39 basis points year-on-year to 4.33 per cent at the end of the second quarter on account of better liability management.

“Despite stressed economy, we feel confident by our results. Going by the current industry scenario, we have performed really well. Our focus for the last two quarters has primarily been driven by twin objectives of sustaining growth and maintaining a quality asset book. So far, we have pulled it through,” Mushtaq Ahmad, chairman and chief executive officer of J&K Bank, said in his post-earnings comments.

The gross non-performing asset (NPA) ratio was 1.69 per cent, while the net bad loan ratio was 0.19 per cent for July-September period. The non-performing asset (NPA) coverage ratio was 92.06 per cent at the end of the quarter.

“This year, we have already opened five business units in Bangalore, Delhi and Hyderabad. We are prospectively looking at opening 15 more such units this fiscal in Maharashtra, Kerala, Karnataka and Delhi. Our corporate loan book outside the state shall grow, though on a very selective basis,” Ahmad said.

On Friday, J&K Bank shares ended at Rs 1,293 on the National Stock Exchange (NSE), up 1.2 per cent from previous close.

“At the current market price, the stock is trading at a higher end compared to peers, which factors in its better asset quality performance vis-a-vis peers even in a challenging macro economic environment. Hence, we maintain our neutral recommendation on the stock,” Vaibhav Agrawal, vice-president for research - banking at Angel Broking, said in a note to clients.

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