Many banks are reported at higher bad loans a key point for the industry which has been battling slowdown in economic activity and stalled projects over the past two years.

According to the sources, the recent updates from the banking sector this week saw a few major private banks announced their financial results for the January to March quarter and the full fiscal year 2017. Several banks reported higher bad loans — a pain point for the industry which has been battling slowdown in economic activity and stalled projects over the past two years. Banks including HDFC Bank, Axis Bank, IDFC Bank posted increase in their gross non-performing assets (NPAs), however, portrayed a promising financial year 2018. Also, the Reserve Bank of India’s (RBI) asset classification guidelines to provide more for the good loans which have potential stress didn’t impact most of the banks.

HDFC Bank– For HDFC Bank, country’s second largest bank by asset size, profit grew by 18 percent but it also reduced its employee base through less recruitment and expansion during the year. HDFC Bank reported 18.25 percent year-on-year (YoY) rise in Net Profit to Rs 3,990.09 crore which was higher than the CNBC-TV18 estimate of Rs 3,966.60 crore. The private sector bank reported a net profit of Rs 3374.22 crore in the year-ago period. Also, the bank cut employee strength for the second straight quarter on the back of its digital outreach and slower branch expansion. The bank’s staff strength has fallen by 6,096 or 7 percent to 84,325 in the quarter ended March 2017 from 90,421 in December 2016. Aditya Puri, HDFC Bank’s CEO, said he sees the bank to be in the sweet spot in the economy and that the best in loan growth is yet to come.

Axis Bank– HDFC Bank’s peer Axis Bank, third-largest private bank in terms of asset size, posted a 43 percent slump in its net profit at Rs 1,225 crore due to worsening asset quality woes. However, it managed to halve fresh accretion of bad loans from its peak levels. The bank plans to close its Rs 9,436 crore watch-list of bad loans by the end of 2018, even as challenges continue into the year ahead.

Kotak Mahindra Bank–  didn’t disappoint the Street with its high quality earnings performance for the March 2017 quarter. However, the business growth numbers were significantly softer compared to some of its peers. While being more than adequately capitalised (capital adequacy ratio 16.8 percent), the caution from this savvy bank is intriguing.

The country’s fourth-largest private bank posted robust results even as some loans inherited from the ING Vysya merger soured. The private bank saw a 40 percent increase in its net profit for the March quarter at Rs 976.5 crore, driven by other income, operating income and net interest income.

IDFC Bank– New age lender IDFC Bank’s net profit inched up by 7 percent and was helped by asset sale worth Rs 2,000 crore during the quarter. The infrastructure heavyweight plans to expand its retail book which has been the growth area for all banks given the untapped market in the banking services space. IDFC Bank, which set up its banking operations in 2015, is now aggressively betting on the “Bharat” banking segment for the next 2-3 years. Listing out the bank’s medium-term goals, Rajiv Lall, MD and CEO of IDFC Bank said they plan “to systematically build a mass retail bank in the next 24-36 months”.

Bandhan Bank– The Kolkata-based Bandhan Bank which started banking operations just before IDFC Bank has been a micro financier and has been keen to expand its small and medium enterprises spot and capitalize on its retail and micro lending strength. The private sector lender reported net profit of Rs 1,112 crore for the full year ending March 2017 on the back of healthy CASA (current and savings account) deposits and loan growth. For the fourth quarter, the net profit grew to Rs 323 crore from 142 crore a year ago.

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