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Last leg of NPA cleanup to hurt PSU banks more; weak capex cycle to add to woes

RBI’s recent circular on non-performing assets would mean provisions by banks towards bad loans staying elevated for at least three more quarters.

February 14, 2018 / 07:02 PM IST

Madhuchanda DeyMoneycontrol Research

The disastrous third quarter performance of most public sector banks was an outlier in an otherwise encouraging earnings season. Provisions for bad loans and a sharp decline in treasury income squeezed bottomlines, and the woes may not end anytime soon.

RBI’s recent circular on non-performing assets would mean provisions by banks towards bad loans staying elevated for at least three more quarters. PSU banks have been consistently losing business to their private sector counterparts and things will get worse before getting better. Who will eventually win?

Quarterly result – the key trends