Apart from the seasonal impact, heightened due to general elections and heat waves across the country that affected business activities, most private lenders saw a higher formation of fresh bad loans emanating from retail, especially personal loans and credit cards. Agriculture loans also contributed to some stress, according to post-results commentary by several banks.
The net profit of nine large private banks rose 26% to ₹44,308 crore in the first quarter that ended June 30 from a year earlier, according to an ET analysis. However, the coming quarter will be challenging, said bank analysts.
Agencies“It is obvious that recoveries cannot continue at the same pace as we have seen the previous few years, so that has to come down and therefore your reported credit costs will inch up as it is net of recoveries,” said Suresh Ganapathy, head of financial services research at Macquarie Capital. “The issue is there has also been some pickup in stress in the unsecured segment, there is some element of overleveraging in the system, so that will spill over in some form or the other. It is not a decisive change in the NPL (non-performing loan) cycle. But it is a decisive change towards a normalisation path.”
India’s largest non-state lender, HDFC Bank, reported a 35% rise in net profit to ₹16,175 crore in the June quarter. Deposit growth was lower than the rate required for an accelerated normalisation of its liability profile.
