Page 7 - Banking Finance December 2023

BANK UPDATE

quarter. In the second quarter of the The lender revealed that its consoli- Only roughly 6% of unsecured loans are
current fiscal year, Net Interest Income dated profit after tax (PAT) increased given to highly compensated, well-
(NII) increased by 10.23% to Rs 3,028 by 51.1% to Rs 16,811 crore during the rated corporates.
crore from Rs 2,747 crore the previous September quarter. At 27,928 crore,
year. the net profit increased by 41% on a Fallout from UCO Bank:
half-yearly basis.
As of September 30, gross non-per- Government advises PSBs
forming assets (NPAs) represented "Our portfolio is still strong, and the
4.62% of gross advances. credit environment is benign. When to boost digital security
Additionally, net non-performing assets compared to our 3, 6, and 12 months In light of the recent UCO Bank inci-
(NPAs) decreased to 1.64 percent from ago, our NPA ratio of 1.34 percent is dent, the finance ministry has re-
2.95 percent in the same period of the quite strong and healthy, and it has quested that state-owned banks review
previous fiscal year. improved, Vaidyanathan told reporters. the systems and procedures pertaining
to their digital operations. Sources
Consequently, compared to the same claim that the banks have been coun-
period last year, provision and contin- Unsecured loans are not a selled to assess and strengthen their
gencies decreased to Rs 967 crore problem, according to SBI cyber security defenses.
from Rs 1,125 crore. The provision cov- Chairman
erage ratio increased from 89.20 dur- According to sources, banks should
ing the same period last year to 92.54 Chairman of State Bank of India Dinesh maintain a close eye on things and be
during the current quarter. Khara stated that the segment's gross prepared for any future cyber attacks.
non-performing assets (NPAs) stand at As the financial sector becomes more
It stated that the net interest margin a mere 0.69 per cent, and there are
increased to 3.53% from 3.12% the no worries regarding the bank's port- and more digitalized, the finance min-
previous year. folio of unsecured loans. istry and RBI have been regularly edu-
cating banks on this topic. UCO Bank,
The bank's capital adequacy ratio rose SBI's statement coincides with Reserve a public sector lender with headquar-
from 13.56 percent to 14.82 percent.
Bank of India Governor Shaktikanta ters in Kolkata, notified its account
Comparing the bank's total business to Das's concerns last month regarding holders last week of an incorrect credit
Rs 5,40,130 in the second quarter of the exceptionally rapid growth of some of Rs. 820 crore made through the
the previous fiscal year, there was an personal loan components. Immediate Payment Service (IMPS).
11.51 percent growth to Rs 6,02,284 "We are not concerned about unsecured The bank noticed that from November
crore. loans at all. When asked about the future 10 to 13, certain transactions started
of unsecured loans, Khara responded, "I by customers of other banks had re-
HDFC Bank's net profit in- have stated it in the past and I still main- sulted in credit to UCO Bank account
creases by 51%. tain my stance that our unsecured book holders without these customers actu-
is better than secured loans. ally receiving money from these banks
HDFC Bank's standalone net profit in- because of technical problems with
creased by 50.6% to Rs 15,976 crore With a gross non-performing asset IMPS.
in the quarter that ended in Septem- (NPA) of just 0.69 percent, he said the
ber. bank's book of unsecured loans is ap- The instantaneous interbank electronic
proximately Rs 3.2 lakh crore. fund transfer system, or IMPS, operates
This is the bank's first quarterly finan- without human intervention. About
cial result following its July 1 merger The majority of the bank's unsecured 79% of the total, or Rs 649 crore, was
with HDFC Ltd. However, because the loans-nearly 86%-go to people who recovered by the bank after blocking
two entities used different accounting have salary accounts with it and are the recipients' accounts.
standards, the second quarter's finan- employed by the government. The
cial results cannot be compared to the percentage rises to 94% when armed The state-owned bank has not yet dis-
same period in the previous fiscal year, forces, paramilitary forces, and public closed if a hacking attempt or human
according to Srinivasan Vaidyanathan, sector organizations are taken into error caused this technical malfunc-
the bank's chief financial officer. account, he said. tion.

BANKING FINANCE | DECEMBER | 2023 | 7