NPA provisions continue to rise sequentially in Q2 amid seasonal weakness
loan loss provisioning by publicly listed banks in the June quarter increased to a four-quarter high led by a select banks including public sector banks (PSBs) such as State Bank of India (SBI) and Central Bank of India and private sector banks such as Axis Bank, Kotak Mahindra Bank, and Bandhan Bank. The sequential increase can be attributed to seasonal weakness in collections and higher delinquencies in the retail segment.
For a sample of 29 banks, provisioning for non performing assets (NPAs) reached Rs 25,737.1 crore in the June 2024 quarter. On a sequential basis, these provisions rose by 11.3%, following an 18.3% increase in the previous quarter. The increase in provisioning in the June quarter was driven largely by the private sector banks, which posted a 38% sequential jump whereas the PSBs reported 2.9% drop in provisions.
One out of every three banks in the sample — 11 to be precise — reported a sequential drop in the NPA provisioning in the June quarter while 14 or half of them showed a year-on-year drop.
On a year-on-year basis, NPA provisions for the total sample fell marginally by 1.4% largely on account of a 12.8% drop reported by the PSBs even as their private sector counterparts showed 19.4% increase in the reading.
The total sample’s net interest income (NII) increased by 9.7% year-on-year to a record Rs 1,99,168 crore. It grew by 15.1% in the case of private sector banks while for the PSBs, the growth was lower at 5.3%. Of the 29 banks in the sample, 26 showed a year-on-year improvement in NII
