{"id":17109,"date":"2020-08-24T05:39:33","date_gmt":"2020-08-24T05:39:33","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=17109"},"modified":"2020-08-24T05:39:33","modified_gmt":"2020-08-24T05:39:33","slug":"cautions-see-psbs-set-aside-bulk-of-profits-as-provisions","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=17109","title":{"rendered":"Cautions see PSBs set aside bulk of profits as provisions"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2018012 size-large\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2018012 size-large\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2018012 size-large\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-313x209.jpg 313w, https:\/\/images.financialexpress.com\/2020\/07\/1-240.jpg 660w\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><\/noscript><\/noscript><span class=\"article-caption\">Provisions also moved up due to some large accounts which have not been resolved, given the uncertain environment. (Reuters file image)<\/span><\/figure>\n<\/div>\n<p>A clutch of twelve public sector banks (PSBs) has set aside about 80% of their aggregate operating profits they made in the June quarter as provisions turning cautious on accounts under moratorium, data from Capitaline shows. This is higher than the comparable amount of nearly 60% for private banks but lower than the roughly 130% that the PSBs set aside in the March quarter.<\/p>\n<p>However, the Q4FY20 numbers are not strictly comparable with those for Q1FY21 as they do not account for the six smaller banks which were merged with four larger ones, effective April 1. The two banks that provided most aggressively \u2013 Punjab &amp; Sind Bank and <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/bank-of-baroda-stock-price\/\" rel=\"noopener noreferrer\">Bank of Baroda<\/a> (BoB) \u2013 were the only two PSBs to report losses for the June quarter.<\/p>\n<p>The caution suggests banks are somewhat worried about asset quality even as the moratorium camouflages the true quality of the loan book. Provisions also moved up due to some large accounts which have not been resolved, given the uncertain environment.<\/p>\n<p>BoB said that it was taking excess provisions under the Reserve Bank of India\u2019s June 7 circular for an exposure that had slipped but needed to be reported as a standard account as it was government-guaranteed. The bank holds total provisions of Rs 2,500 crore against this account, of which Rs 1,100 crore was made in the June quarter.<\/p>\n<p>Sanjiv Chadha, MD and CEO, BoB, said the lender expects this provision to be written back over the next few quarters. \u201cSo, we see this provisioning as something which will be available to the bank in subsequent quarters for Covid-related stress, should it arise,\u201d he added. This apart, BoB set aside Rs 700 crore in provisions against other standard assets which are seeing stress on account of the pandemic. The lender\u2019s provision coverage ratio (PCR) at the end of June was 83%.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden alignnone size-large wp-image-2063291\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-620x365.jpg\" alt=\"\" width=\"620\" height=\"365\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><\/p>\n<p><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden alignnone size-large wp-image-2063291\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-620x365.jpg\" alt=\"\" width=\"620\" height=\"365\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-2063291\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-620x365.jpg\" alt=\"\" width=\"620\" height=\"365\" srcset=\"https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-620x365.jpg 620w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-300x177.jpg 300w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-768x453.jpg 768w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-453x267.jpg 453w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-440x259.jpg 440w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-80x47.jpg 80w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs-313x184.jpg 313w, https:\/\/images.financialexpress.com\/2020\/08\/24PSBs.jpg 896w\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><\/noscript><\/noscript><\/p>\n<p><a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/state-bank-of-india-stock-price\/\" rel=\"noopener noreferrer\">State Bank of India<\/a> (<a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/state-bank-of-india-stock-price\/\" rel=\"noopener noreferrer\">SBI<\/a>), which made provisions equivalent to 69% of its operating profit, also said it was building larger buffers than mandated. SBI chairman Rajnish Kumar said, \u201cWe have decided to enhance the provision or accelerate the provision over the minimum regulatory (requirement) and one account which is worth mentioning is which was declared fraud and a dispensation for four quarters is available. But, within this quarter, the entire amount has been provided and net NPA is zero.\u201d The bank expects a significant recovery from this fraud account in the December quarter.<\/p>\n<p>While concerns around corporate asset quality have not fully blown over, analysts expect the first wave of post-moratorium bad loans to emerge from the retail and micro, small and medium enterprises (MSME) segments. Moody\u2019s said recently that in its base-case scenario, PSBs will need external capital of up to `2 lakh crore in the next two years. This is because their credit costs will increase to 3% of gross loans, annually over the next two years, from 2.5% in FY20. \u201cThese levels of credit costs are required for banks to boost provision coverage ratios to 70% against enlarged pools of NPLs by March 2022 from their current levels of about 65%,\u201d Moody\u2019s said.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\"https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\"https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<p class=\"telegram-text\"><img loading=\"lazy\" decoding=\"async\" class=\"telegrma_img\" src=\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\" alt=\"\" width=\"24\" height=\"24\" style=\"margin: 0px 5px 4px 0px; float: left;\"\/>Financial Express is now on Telegram. <a href=\"https:\/\/t.me\/TheFinancialExpressOnline\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to join our channel<\/a> and stay updated with the latest Biz news and updates.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\\\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/cautions-see-psbs-set-aside-bulk-of-profits-as-provisions\/2063290\/\\\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Provisions also moved up due to some large accounts which have not been resolved, given the uncertain environment. (Reuters file image) A clutch of twelve public sector banks (PSBs) has set aside about 80% of their aggregate operating profits they made in the June quarter as provisions turning cautious on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12831,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-17109","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/08\/1-240.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/17109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17109"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/17109\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/12831"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}