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Business News/ Market / Stock-market-news/  Shares of banks fall as weak quarterly results disappoint investors
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Shares of banks fall as weak quarterly results disappoint investors

Federal Bank fell as much as 9.7% and Karnataka Bank declined as much as 7.3%

The weak results reported by the banks pulled down shares of most state-owned banks on fears that asset quality pressure will persist for some time. Photo: Hemant Mishra/MintPremium
The weak results reported by the banks pulled down shares of most state-owned banks on fears that asset quality pressure will persist for some time
. Photo: Hemant Mishra/Mint

Mumbai: Shares of banks declined on Monday after quarterly results reported by mid-sized banks such as Karnataka Bank Ltd and Federal Bank Ltd disappointed the markets.

Federal Bank fell as much as 9.7% in intraday trading, its sharpest fall since 28 August 2013, after it reported a 35.8% drop in profit from a year earlier to 141 crore due to higher provisions and bad loans. The bank reported a 595% increase in its provisions to 153 crore in the quarter as compared with 22 crore a year ago. Net non-performing assets (NPAs) stood at 0.98% versus 0.68% last year, while gross NPAs were at 2.59% versus 2.22%.

Karnataka Bank fell as much as 9.42%, its steepest fall since 31 July 2013, after the bank reported 10.12% decline in its net profit to 109.30 crore in the June quarter due to higher bad loans and provisions. The bank’s provisions rose 107% from a year ago to 115.80 crore. Net NPAs stood at 2.05% versus 2.37% last year, while gross NPAs were at 3.26% versus 3.43%.

The weak earnings reported by these banks pulled down shares of most state-owned banks on fears that asset quality pressure will persist for some time.

Oriental Bank of Commerce fell 3.43%, Bank of India fell 3.02%, Punjab National Bank fell 2.31%, Allahabad Bank fell 2.68%, Axis Bank fell 0.34%, Union Bank of India fell 2.93%, Syndicate Bank Ltd fell 2.60%, Canara Bank Ltd fell 3.01%, Bank of Baroda fell 2.05%, ICICI Bank Ltd fell 0.49%, State Bank of India fell 1.37%, while Yes Bank fell 0.67%. The Bankex index fell 0.33%.

Total stressed advances at scheduled commercial banks in India increased to 11.1% of total advances in March from 10.7% in September, the Reserve Bank of India said in its Financial Stability report in June. Stressed assets include gross NPAs and loans restructured by banks.

Gross NPAs of banks increased to 4.6% of total advances in March from 4.5% in September, the report said, adding that stress on bank books will persist in the first half of this year.

“The macro stress test of credit risk suggests that under the baseline scenario, the gross NPA ratio may increase to 4.8% by September 2015 from 4.6% as of March 2015 which could subsequently improve to 4.7% by March 2016," the report said.

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Published: 20 Jul 2015, 01:07 PM IST
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