Corporate NPA addition slows, loan recoveries may have peaked

economictimes.indiatimes.com:

Bank recoveries are likely at their peak and trending lower as the addition of lumpy corporate non-performing assets (NPAs) has slowed. Recoveries are expected to normalise as fresh slippages will mostly come from retail and micro, small and medium enterprises (MSME), accounts that are by nature smaller loans. Bank earnings analysed by ET after the first-quarter results show that bank recoveries have been sliding over the last one year. Recoveries for all large banks were lower than a year ago and down from what they were in March. For example, State Bank of India’s (SBI) recoveries and upgrades were at Rs 3,607 crore in June 2023 down from Rs 5,208 crore a year ago and Rs 4,200 crore reported in March 2023. The trend is the same for Punjab National Bank (PNB), Bank of Baroda (BoB), ICICI Bank, HDFC Bank and Axis Bank. “Bank upgrades and recoveries are trending lower as lumpy recoveries from corporate accounts are few and far between. Also, recoveries from legacy accounts, which were strong for the past few quarters, have started normalising, partly on account of the stock and flow effect,” said ASV Krishnan, senior vice president at HDFC Securities. Krishnan was referring to the improvement in asset quality across the banking sector which has reduced the stock of NPAs, likely impacting recoveries in the future. Take SBI, the bellwether of Indian banking which has seen its gross NPA ratio come down to a decadal low of 2.76% and from a peak of 10.91% in March 2018.

Punjab & Sind Bank plans to double ATM network to 1,600 in next two years

Chairman Dinesh Khara said that almost all the slippages for the bank came from the MSME and agriculture portfolio and out of the Rs 7,659 crore fresh slippages