NPAs hit profits: 10 worst-performing banks in the past 5 years

Indian banking system is in a mess. Bank profitability is at its worst after the February guidelines of the Reserve Bank of India, which classifies loan default that exceed 90-day period as non-performing asset. Recent frauds in public sector banks have made matters worse for the sector. Here is a list of top 10 worst performing banks in India.

Comparing the five year average profits of the major banks in the Indian Banking sector, Indian Overseas bank performed the worst followed by IDBI Bank and Central Bank of India.

Taking the average of the last five years' results, Indian Overseas bank has lost Rs 1,119.89 crore every year since March 2013. IOB, which had more than one fifth of its loans gone bad (22.73%) has in January written off  bad loan amounting to Rs 6,978.94 crore against its reserves.

IDBI posted a loss of Rs 5158.14 crore in March 2017 and loss of Rs 3,664.80 crore in March 2016, Rs 5,663 crore in March 2018 which brings their average loss in the five year period to Rs 989.21 crore. The losses in recent years can be attributed to bad loans and the provisions for bad loans on the bank's account.

The bank has been losing Rs 700 crore of investor money every year since 2013. Central Bank of India posted as loss of Rs 2,439.10 crore during the FY 17. Higher provision for accounts referred to the National Company Law Tribunal and mark-to-market losses due to depreciation in investments were the key factors.

In 2016, Bank of India had a revenue of Rs 41,796.47 crore, but it posted a loss of Rs 6,089.21 crore. The five year average profit for the Bank of India came to Rs 188.39 crore. Losses were majorly due to provisioning for bad loans which rose by 72% due to high non-performing assets (NPA) ratio.

Rs 305.98 crore is the five year average profit of Jammu & Kashmir Bank. The bank posted a loss only in 2017 amounting to Rs 1,632.29 crore due to provisions made against bad debts to the tune of Rs 2,115.93 crore.

In 2017, Oriental Bank of Commerce posted a loss of Rs 1,094.07 crore which rose to Rs 1,650 crore for the quarter ended March 18. The poor performance was attributed to poor asset quality of the bank which worsened with net non-performing assets (NPAs) rising to 10.48% of the net advances as on 31 March 2018 against 8.96% reported a year ago.

The five year average profit for Canara Bank amounts to Rs 1,264.40 crore. There has been a decrease in the bank's profitability due to a three-fold jump in the bank's provisions. Also, the bank has fully provided for fraud in the gem and jewellery account and has recorded the same as NPA in its March quarter 2018 where the bank has showed a loss of Rs 4,859.77 crore.

Union Bank earned an average profit of Rs 1,508.52 crore during the FY 13-FY 17.In the March 18 quarter alone, the bank has reported Rs 2,583 crore net loss which was a direct result of RBI's stricter regulations.

Even after posting a loss of Rs 5,395.34 crore in FY 16, the bank has managed to stay profitable earning on an average Rs 1,681.57 crore in the five-year period. The latest figures of Q4-18 show a rise of 154% in provisions which amounted to Rs 6,672.4 crore totalling a net loss of Rs 310.34 crore for the March 18 quarter alone.

Punjab National Bank

In March 2018 Q4 alone PNB reported a massive loss of Rs 13,417 crore as compared to y-o-y profit of Rs 262 crore. This was the biggest loss ever quoted by any domestic lender. Reason for such a huge loss was the massive fraud done by the two jeweller groups - Nirav Modi and Gitanijali Gems.