ING Vysya slips on disappointing results

Radhika Merwin BL Research Bureau | Updated on November 25, 2017

The stock of ING Vysya Bank is down nearly 4 per cent today, after the company reported higher additions to bad loans in the June quarter yesterday, when it declared its results.

Increasing bad loans have been an overhang on public sector banks for quite a while now, and few private sector banks that have declared results so far have seen some pressure on their asset quality. Larger banks such as HDFC Bank and Axis Bank that declared their results recently have also reported increase in non performing assets (NPA) in the June quarter.

ING Vysya Bank’s non performing assets clambered up to 2.4 per cent of loans in the June quarter, from 1.7 per cent in the March quarter. In absolute terms the bad loans have gone up by 44 per cent sequentially. The higher than expected slippages has led to higher provisioning, impacting the bank’s earnings. The net profit was down 18 per cent year-on-year in the June quarter, thus disappointing market expectations.

During the quarter one mid sized account which was restructured earlier under Corporate Debt Restructuring (CDR) became an NPA. The management has indicated though that a few accounts that slipped into NPA during the quarter were large accounts and fresh slippages from hereon should be within levels seen in the past.

Over the last two years the GNPA as a per cent of loans has been in the 1.7-1.8 per cent range.

ING Vysya Bank delivered a healthy loan growth of 16 per cent in the June quarter nonetheless. The growth was driven by 22 per cent growth in its SME portfolio. The bank has been building its high-yielding SME loan portfolio which has been its core strength. This segment has grown 33 per cent annually over the last four years.

While the bank’s asset quality may need some watching in the coming quarters, given the possible economic recovery, further slippages may normalise to historical levels.

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Published on July 23, 2014
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