Page 6 - Banking Finance June 2019

BANK UPDATE

Govt raises authorized SBI’s lending rate lowered by 5 bps
State Bank of India has lowered its marginal cost of funds-based lending rate by
capital for Allahabad
5 basis points over all tenors with effect from May 10.
Bank Meanwhile, SBI has also lowered its MCLR twice by 5
The government has increased its bps each after the Reserve Bank of India lowered its
authorized capi- policy repo rate by 25 basis points, from 6.25 per cent
tal by Rs 5,000 to 6 per cent, in early April. Following the MCLR cut,
crore to Rs SBI's benchmark one-year MCLR has come down from
8,000 crore, said 8.50 per cent to 8.45 per cent.
Allahabad Bank.
After discussion with the Reserve SBI records Rs 838-cr profit in Q4
Bank of India, the central govern-
SBI has reported that its balance sheet has been completely recovered in FY2019
ment has increased the authorized
as it recorded a turnaround performance in the fourth
capital of the bank from Rs 3,000 to
quarter.
Rs 8,000 through Gazette Notifica-
The bank has reported a net profit of Rs 838 crore
tion, noted a regulatory filing by
against a net loss of Rs 7,718 crore in the same period
Allahabad Bank.
of the previous year. A considerable improvement in the
The increase in authorized capital
asset quality along with lower fresh slippages and better recoveries has also
will be beneficial for the bank in or-
been reported by the bank.
der to increase further fund up to a
The profit in the reporting quarter came on the back of a 15 per cent year-on-
maximum ceiling of Rs 8,000 crore.
year (Y-o-Y) increase in the net interest income (the difference between inter-
est earned and interest expended) at Rs 22,954 crore and lower loan-loss pro-
PNB may take over three
visions of Rs. 17,336 crore (down 28 per cent Y-o-Y). The bank reported a net
smaller state-owned profit of Rs. 862 crore against a net loss of Rs. 6,547 crore in FY18.
PSBs Loan processing charges inclusive of fee income, commission on government
business, letter of credit, bank guarantee and remittance and collection, was
Punjab National Bank could take con-
increased 2 per cent Y-o-Y at Rs. 8,589 crore in the just ended quarter.
trol of two or
three small Meanwhile, fresh slippages during the quarter were almost 78 per cent lower
state-run banks Y-o-Y at Rs 7,505 crore. The bank reported a net decline of Rs. 15,015 crore in
that could in- gross non-performing assets (NPAs) against a net increase of Rs. 24,286 crore in
clude Oriental the year-ago period. Recovery, inclusive of upgradation, soared to Rs. 5,712
Bank of Commerce, Andhra Bank and crore (Rs. 85 crore in the year-ago quarter).
Allahabad Bank, said two sources fa-
Shedding light on the decline in gross and net NPAs and the considerable im-
miliar with the situation. New Delhi
provement in the provision coverage ratio, Chairman Rajnish Kumar said, "This
has been trying to merge smaller re-
shows that the balance sheet of the bank has been fully repaired. Going for-
gional state-run banks with better-
ward, the impact of the shadow of the past will not be there on the earnings of
managed larger government-owned
the bank."
lenders as one way to reduce bad
The bank said recovery in FY19 was at an all-time high of Rs 31,512 crore, out
loans that stand at more than $130 bil-
Of this, Rs 13,836 crore came through the Insolvency and Bankruptcy Resolu-
lion, or nearly 5 per cent of the nation’s
tion process.
gross domestic output. PNB could start
the process of taking control of the Kumar said, "In the case of all the three major accounts - Essar Steel, Alok In-
banks in the next three months, ac- dustries and Bhushan Power and Steel which are in very advanced stage of reso-
cording to the sources, who declined lution - we have made 100 per cent provision. And, as a result, almost Rs. 16,000
to be named, as they are not crore is what is recoverable as soon as the judicial process is over. This shows
authorised to speak to the media. the strength of the balance sheet as we speak."

6 | 2019 | JUNE | BANKING FINANCE