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PSBs wipe out private banks’ profits

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Mumbai: The banking sector has reported a collective loss of over Rs 4,200 crore for the quarter ended December 2017 as large losses reported by public sector banks have completely wiped out profits earned by large private banks.

According to a study by Care Ratings, 30 banks have reported a net loss of Rs 154 crore for the quarter ended December 2017 as against a profit of Rs 10,237 crore in the corresponding quarter in 2016.

Since the study was published, Bank of India (BoI) and United Bank of India have reported net losses of Rs 2,341 crore and Rs 637 crore, respectively. Corporation Bank also reported on Monday a loss of Rs 1,240 crore, as against a profit of Rs 159 crore in the yearago period.

Public sector banks (PSBs) collectively reported a loss of Rs 15,200 crore for the quarter ended December 2017 following higher provisions of Rs 51,000 crore toward non-performing assets (NPAs). The Care Ratings study of 13 public sector and 17 private banks shows that, so far, banks continue to be under stress despite an increase in loan growth and net interest income. The negative number is expected to rise further with a few PSBs yet to announce their results.

"A major setback for banks was the decline in other income, which is primarily due to the rise in yields on investments which affected the profit and loss due to mark-to-market losses that were booked," the report said.

Besides BoI, the large losses include SBI's surprise loss of Rs 2,416 crore, Central Bank of India's Rs 1,664 crore loss, IDBI Bank's fifth straight quarterly loss of Rs 1,524 crore and UCO Bank's 9th straight quarterly loss of Rs 1,016 crore. Among the smaller banks, Andhra Bank reported a Rs 532- crore loss and Bank of Maharashtra was in the red by Rs 596 crore.

Besides losses on treasury earnings and valuations, PSBs were hit because of forced provisioning on loan accounts that were referred to the National Company Law Tribunal. RBI norms require that banks make 50% provisions on loans in respect of companies against which bankruptcy proceedings have been initiated.

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