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Banking wrap: SBI, ICICI Bank report lesser bad loan accretion; slowdown concerns remain

Axis Bank, Kotak Mahindra Bank expect higher slippages, Bandhan Bank looks to ramp up home loan portfolio

October 27, 2019 / 09:58 AM IST
 
 
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Top lenders in India posted their second quarter results this week, with fewer additions to bad loans. However, bank chiefs expressed concerns on the impact of slowdown and delay in resolution of large accounts on the asset quality and credit costs going forward.


ICICI Bank says asset quality steady as slippages ease in Q2 


ICICI Bank said that fresh additions to bad loans had stabilized, which led to overall improvement in its asset quality. However, there was an uptick in the lender’s watchlist over concerns of an economic slowdown. The total slippages for the quarter were Rs 2,482 crore, lower than around Rs 2,800 crore in the previous quarter and Rs 3,100 crore in the same period in 2018.


SBI says fresh additions to bad loans will further ease by March 2020


In what seems to be a relief from incurring heavy slippages quarter after quarter, the State Bank of India (SBI) expects that fewer loans will turn sour going forward. The country’s largest lender aims to contain its slippage ratio within 2 percent of its loan book by end of the current financial year, Chairman Rajnish Kumar said. The bank’s loan book stood at Rs 22.48 lakh crore on September 30.

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More slippages from watch list likely, says Axis Bank CEO Amitabh Chaudhry


Given the current economic scenario, Axis Bank is likely to witness higher slippages from its pool of stressed assets going forward, the bank’s MD & CEO Amitabh Chaudhry said. Slowing economy, funding issues faced by non-banking finance companies (NBFCs) and housing finance companies, promoters facing legal issues and others under the lens of enforcement agencies are the several challenges that may have a bearing on the banking sector.


Economic slowdown likely to push up credit costs, says Uday Kotak


The slowing economy and a delayed turnaround are likely to push up credit costs for the private sector lender going forward, Uday Kotak, MD, Kotak Mahindra Bank said. “We do believe that the credit costs are going to be a little higher than what we had bargained for at the beginning of the year,” Kotak said in an earnings call, adding that the bank expected the credit costs to be around 60 basis points.


Bandhan Bank looks to ramp up home loan portfolio

Bandhan Bank, which specializes in micro lending, is planning to increase its presence in the home loans market after it took over the portfolio from Gruh Finance in a recently concluded merger. The loans of Gruh Finance now form 28 percent of Bandhan Bank's advances book. Bandhan Bank's share of microfinance loans down at 61 percent, as compared to 87 percent last year

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