In a notable advancement for India’s banking industry, leading banks have shown significant progress in reducing their Non-Performing Asset (NPA) ratios. This positive shift also indicates a strong recovery in the sector’s management of asset quality.
Punjab National Bank (PNB)
Established in 1894, PNB emerged as India’s first swadeshi bank, starting operations from Lahore during the pre-independence era. As one of India’s largest public sector banks, PNB now operates over 10,000 branches nationwide and serves more than 180 million customers.
PNB has emerged as a frontrunner in NPA reduction among public sector banks. Notably, the bank’s gross NPA ratio decreased significantly by 275 basis points to 4.98%. Additionally, their net NPA ratio improved to 0.60%, showing a decline of 138 basis points year-over-year. Consequently, PNB achieved its highest-ever quarterly profit of ₹3,251.5 crore, marking a 159% increase. Moreover, the bank revised its FY25 GNPA guidance to approximately 4%, demonstrating strong confidence in its asset quality management.
Axis Bank
Founded in 1993 as UTI Bank, Axis Bank became the first private sector bank established under the new guidelines of 1993. The bank rebranded to Axis Bank in 2007 and has since grown to become India’s third-largest private sector bank.
Axis Bank stands out for its consistently low NPA levels in the private banking sector. Specifically, their gross NPA ratio declined to 1.44%, showing a reduction of 29 basis points. Subsequently, the net NPA ratio improved to 0.34%. In addition, the bank maintains impressive provision coverage, with cumulative provisions reaching ₹11,815 crore. Therefore, their standard asset coverage stands at 1.20%, indicating robust risk management practices.
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Bank of Baroda (BoB)
Established in 1908 by Maharaja Sayajirao Gaekwad III, Bank of Baroda began its journey in the princely state of Baroda. Today, BoB ranks as one of India’s largest public sector banks, serving over 150 million customers through its extensive network.
BoB has maintained a strong focus on asset quality improvement. As a result, their gross NPA ratio decreased to 2.88% from 3.51%. Meanwhile, the net NPA ratio improved to 0.69% from 0.78%. Furthermore, the bank has consistently delivered quarterly profits exceeding ₹4,000 crore for six consecutive quarters. Consequently, this performance reflects their effective NPA management strategy.
Canara Bank
Founded in 1906 by Ammembal Subba Rao Pai in Mangalore, Canara Bank started as “Canara Hindu Permanent Fund”. The bank has grown into one of India’s largest public sector banks, serving over 110 million customers nationwide.
Canara Bank has shown remarkable progress in reducing its bad loans. Initially, their gross NPA declined by 101 basis points year-over-year to 4.14%. Subsequently, the net NPA decreased by 33 basis points to 1.24%. Moreover, the bank’s management has set ambitious targets to reduce gross NPA to 3.25% by FY25 end. Therefore, this demonstrates their commitment to strengthening asset quality.
IDBI Bank
Established in 1964 as Industrial Development Bank of India, IDBI Bank began as a development finance institution. The bank transformed into a full-service commercial bank in 2004, marking a significant evolution in its business model.
IDBI Bank distinguishes itself with an exceptional provision coverage ratio of 99.09%. Particularly, their gross NPA ratio improved significantly, showing a reduction of 185 basis points to 4.53%. Meanwhile, the net NPA ratio decreased by 58 basis points to 0.34%. Subsequently, this resulted in a 44% increase in profit after tax. Therefore, IDBI Bank’s performance showcases effective risk management and strong recovery mechanisms.
Overall, these banks demonstrate a clear trend of improving asset quality in 2024. This improvement reflects better risk assessment, strong recovery mechanisms, and prudent lending practices. These companies in the banking sector appears well-positioned for sustained growth with healthier balance sheets.
Written By Fazal: Ul Vahab
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