ICRA RATING FEATURE: INDIAN BANKING SECTOR

Q3 and 9M, FY2012 Performance Review and Outlook

QUARTERLY REVIEW FEBRUARY 2012 ICRA

Introduction
This paper analyses the performance of 20 Nationalised Banks, 6 banks in the State Bank Group (SBI Group) collectively referred to as public sector banks (PSU banks) and 16 banks in the private sector (private banks) during the period April 2011 to December 2011 (9M, FY2012). These 42 banks together account for around 92% of the total credit portfolio and deposits of all scheduled commercial banks (SCBs) in India as of December 2011. The key performance highlights for the quarter and nine months ended December 2011 are as follows: Year-on-year (yoy) credit growth moderated to 18.9% as on December 31, 2011 for the 42 banks under review from 22.7% as on March 31, 2011 with corporate credit offtake losing pace because of higher interest rates; average lending yields of the State Bank Group of banks (SBI Group) increased by 140 basis points (bps) during the nine month period under review, while other banks reported a 120 bps increase on an average. The yield on advances began stabilising in the third quarter (Q3) of 2011-12 (FY2012) after a sharp increase in the first half (H1); the pace of credit growth is likely to remain moderate over the next few quarters. The Gross Non-Performing Assets (NPAs) of Nationalised Banks rose to 2.4% of advances as on December 31, 2011 from 1.9% as on March 31, 2011, while those of the SBI Group increased sharply to 4.3% from 3.0% during the same period; certain large corporate slippages and a sharp increase in advances to the agriculture and small & medium enterprise (SME) sectors was noted during the nine month period. The Gross NPAs of private banks moderated to 2.1% of advances as on December 31, 2011 from 2.3% as on March 31, 2011. The share of restructured assets of Nationalised Banks continued to increase, and was up at 5.5% of the credit book as on December 31, 2011 from 4.7% as on March 31, 2011; total restructured assets of Nationalised Banks increased by about 30% while the SBI Group reported a relatively moderate increase of 9% over the same period. Slippages out of restructured portfolios continued to rise for Nationalised Banks during 9M, FY2012. Private banks restructured assets also rose to 1% of advances, albeit on a smaller base. Net NPAs in relation to Net Worth of the SBI Group weakened to 24.2% as on December 31, 2011 from 17.7% as on March 31, 2011 with NPAs increasing and the provision coverage being lower. For Nationalised Banks, the ratio increased to 15.8% from 11.6% over the same period. Private banks continued to maintain a stable solvency profile at around 3% during the period stated. Although difficulties in the operating environment may ease to an extent the fiscal 2013, large restructured accounts and structural weaknesses in some large exposures could lead to a further increase in NPAs and therefore deterioration in the overall solvency profile of banks. Implementation of some key policy initiatives could however avert a sharp deterioration in asset quality. The median Tier I capital of PSU banks moderated to 8.3% as on December 31, 2011 from 8.7% as on March 31, 2011 as the number of banks with Tier I capital less than 8% increased to 12 as on December 31, 2011 from four as on March 31, 2011 partly because of the non-inclusion of unaudited profits for 9M, FY2012. ICRA sees an improvement of 30-60 bps in the overall Tier I capitalisation by March 2012 and expects the proposed capital infusion of around Rs. 20,000 crore into PSU banks by the government in the current fiscal to likely support their medium-term growth.

Contacts: Karthik Srinivasan +91 22 3047 0028 karthiks@icraindia.com Vibha Batra +91 124 4545 302 vibha@icraindia.com Avinash P. +91 44 4596 4311 avinashp@icraindia.com

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Deposits growth remained steady during 9M, FY2012 with high term-deposit rates attracting retail depositors. However, Nationalised Banks CASA1 came under moderate pressure, sliding down to 31.1% as on December 31, 2011 from 33.2% as on March 31, 2011. The large private banks and the SBI Group were able to maintain stable CASA levels during the period stated, while small private banks faced pressure on this front. Increase in term deposit rates and hardening interest rates for most part of the year to December 2011 led to an increase in the cost of funds to 6.7% in Q3 FY2012 from 5.7% in Q4 FY2011. This level of cost is unlikely to reduce sharply even as systemic interest rates could soften, given the significant share of fixed-rate, medium-term resources mobilised. A few banks increased the interest rate on savings accounts and reported improved traction on savings deposit mobilisations during the last few months. However, it is still too early to assess the impact of this development at the industry level since most banks continue to maintain the annual savings deposit rate at 4%. Interest margins were stable during the 9M, FY2012 with the increase in funding costs being passed on to borrowers. However, passing on of the benefit of lower incremental funding costs would be a function of competition. There was a marginal increase in aggregate provisioning levels during 9M, FY2012 mainly because of loan-loss provisions. Going forward, an increase in provisions following possible deterioration in asset quality could impact the asset quality of the banking system over the next few quarters.

Current account and savings account balances

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Banks report steady moderation in credit growth in current fiscal; yields move in line with systemic interest rate cycle
Chart 1: Trend in Advances Growth (yoy)
29.0%
27.0% 25.0% 23.0% 21.0%

19.0%
17.0% 15.0% 13.0% 11.0% 9.0% Mar-10 Jun-10 SBI Group Sep-10 Dec-10 Nationalised Banks Mar-11 Jun-11 Private Banks Sep-11 All Banks Dec-11

Chart 2: Trend in Quarterly Yield on Advances

11.5%

11.0%
10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

PSU banks credit growth moderated to 18.5% yoy in December 2011 from 19.5% yoy in September 2011 and 22.0% yoy in March 2011 with the average lending yields rising to 10.8% from 9.6% during this period. However, despite moderation, sequential credit growth remained strong at 5.7% in Q3, FY2012 as compared with the 2.2% in Q2, FY2012. Systemic domestic credit grew 3.2% in Q3, FY2012. Private sector banks continued to report robust yoy credit growth clocking 21.5% in December 2011 (23% in September 2011), even as systemic credit growth fell to 15.8% in December 2011 from 19.4% in September 2011. Despite moderation, sequential credit growth remained strong at 5.2% in Q3, FY2012 as compared with the 6.0% in Q2, FY2012. Systemic domestic credit growth fell sharply to 15.8% in December 2011 from 19.4% in September 2011 in a lagged response to the series of increases in benchmark interest rates by the Reserve Bank of India (RBI) since March 2010. With banks not increasing the base rate in Q3, FY2012, the pace of increase in lending yields softened marginally in that quarter after a sharp rise in H1, FY2012. While Nationalised Banks reported steady yields at 10.9% in Q3, FY2012 and Q2, FY2012 compared to 9.8% in Q4, FY2011, the SBI Groups lending yields increased marginally to 10.6% in Q3, FY2012 from 10.4% sequentially and from 9.2% in Q4, FY2011. Some private banks reported a sharper rise as they increased their exposure to the retail and SME segmentsones that fetch higher yields. During 9M, FY2012, the SBI Group increased its base rate by 1.75%, Nationalised Banks by 1.15-1.25%, and private sector banks by 1.00-2.50% (median: 1.45%). In ICRAs opinion, lending yields are likely to have peaked in Q3, FY2012, but a reversal in the base rate would remain a function of banks cost of funds as most banks have locked in medium-term deposits at relatively high rates over the last few quarters. The outlook for systemic credit growth remains moderate, particularly if banks hold on to their current lending rates. However, ICRA expects private banks to continue outperforming systemic growth. Still, it is unlikely that their share in the total advances of the banking system would increase sharply.

Source: ICRA Research; Banks

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PSU banks asset quality comes under greater stress; NPAs and restructured advances increase sharply while solvency weakens
Chart 3: Trend in Gross NPAs (%)
5.0% 4.0%

3.0%
2.0% 1.0% 0.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group
.

Nationalised Banks

Private Banks

All Banks

Chart 4: Trend in Net NPAs (%)

2.5% 2.0%

Nationalised Banks gross NPA levels remained stable in Q3FY12 at 2.4%, while those of SBI group increased to 4.3% from 4.0% as on September 2011. However, in the nine months ended December 2011, all PSU banks2 reported an increase in gross and net NPAs, in sharp contrast with private banks which reported have reported a steady q-o-q decline in NPA levels. The Gross NPA% of SBI Group witnessed a sharp deterioration, whereby Gross NPA% increased from 3.0% as on March 2011 to 4.3% as on December 2011. Private Banks asset quality remained largely stable with gross NPAs moderating marginally to 2.1% from 2.2%; Net NPA level also remained stable at 0.5% as on December 2011 and September 2011. Continued improvement on asset quality indicators for large private banks is largely on improvement in the asset quality indicators for ICICI over the last few quarters. With RBI relaxing the provision coverage norm by removing the overall requirement of 70%, the provision cover of several large banks declined; while provision cover of PSU Banks excluding technically written off accounts declined to 52.2% as on December 2011 from 56.8% as on March 2011, ICRA estimates a reduction of 10-15% in provision cover including technically written off portfolio during this period.
Bank Nationalised Banks: BoB BoI BoM CBI Corp Dena Indian IOB PNB Union SBI Group: SBI SBH Private Banks: ICICI HDFC Axis Yes Federal SIB ING KVB Source: ICRA Research; Banks Table 2: Provision Coverage Ratio (including written off accounts) Dec-11 Mar-11 80.5% 60.9% 87.0% 48.1% 62.9% 76.6% 76.5% 71.7% 70.0% 63.1% 62.5% 51.3% 78.9% 80.3% 75.3% 80.0% 80.5% 75.2% 85.0% 80.0% 85.0% 72.2% 65.6% 67.6% 74.7% 74.6% 84.3% 70.5% 73.2% 67.6% 64.9% 65.8% 76.0% 82.5% 80.9% 88.6% 82.1% 73.6% 83.4% 93.9% Change -4.5% -11.3% 21.4% -19.6% -11.8% 1.9% -7.8% 1.2% -3.2% -4.4% -2.4% -14.5% 2.9% -2.2% -5.6% -8.6% -1.5% 1.5% 1.6% -13.9%

1.5%
1.0% 0.5% 0.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Source: ICRA Research; Banks

Table 1: Share of Restructured Advances in Total Advances Bank Dec-11 Mar-11 Change Increase in Restructured Portfolio Nationalised 5.5% 4.7% 0.8% 30.3% Banks SBI Group 4.5% 4.6% -0.1% 9.3% PSU Banks 5.2% 4.6% 0.6% 24.4% Private Banks 1.0% 0.7% 0.3% 66.1% All Banks 4.4% 3.9% 0.5% 25.8% Source: ICRA Research; Banks

Except Bank of Maharashtra and Syndicate Bank

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Chart 5: Solvency Profile (Net NPAs/Net Worth)

30.0% 25.0% 20.0%

15.0%
10.0% 5.0% 0.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Source: ICRA Research; Banks

Private banks were largely shielded from the two major causes of increase in systemic NPAs during 9M, FY2012: (1) slippages from restructured advances, given their small share of the same; and (2) slippages on migration to system-based NPA recognition, as private banks historically have had robust information technology systems. The share of restructured advances in the total credit portfolio of PSU banks continued to increase during 9M, FY2012 and is estimated at 5.2% as on December 31, 2011, as against 4.6% as on March 31, 2011. In absolute terms, the SBI Group reported just a 9.5% increase even as the Nationalised Banks restructured book swelled by a sharp 30% (Annexure 4). Some of the ongoing restructuring of large power distribution entities could increase share of restructured advances of PSU Banks further by March 31, 2012. While private banks have an insignificant share of the total restructured assets of the banking system, the restructured portfolios of the three largest private banks reported a sharp increase to Rs. 6,555 crore as on December 31, 2011 from 3,724 crore as on March 31, 2011. In ICRAs estimate, the overall restructured advances of private banks increased 65-70% during the 9M, FY2012. Cumulative slippages from restructured assets for four large Nationalised Banks3 increased by 27.3% in 9M, FY2012, while SBI reported nearly stable NPAs out of its restructured portfolio during this period. The solvency profile4 of the SBI Group weakened substantially to 24.2% as on December 31, 2011 from 17.7% as on March 31, 2011 following a sharp rise in the net NPAs of SBI. The solvency profile of Nationalised Banks also weakened to 15.8% as on December 31, 2011 from 11.6% as on March 31, 2011 with some large banks like CBI and BoI reporting a sharp deterioration in solvency following a decline in provision coverage. Private banks solvency profile remained largely unaffected in the year to December 2011 on the strength of robust provision coverage and strong capitalisation. However, some regionally-focused, small private banks such as KBL and LVB reported some deterioration in solvency on account of significant exposures to export oriented and other vulnerable sectors. Several PSU banks are awaiting capital infusion (by the government), which could improve their solvency position in the near term. Although difficulties in the operating environment may ease to an extent the fiscal 2013, large restructured accounts and structural weaknesses in certain sectors could lead to a further increase in NPAs and therefore deterioration in the overall solvency profile of banks. Implementation of some key policy initiatives could however avert a sharp deterioration in asset quality.

3 4

Represents PNB, BOB, Canara and BoI Computed as net NPAs / Networth

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Private banks maintain strong Tier I capital; capital infusion by government in PSU banks critical for growth as median Tier I capital ratio moderates
Chart 6: Capital Adequacy of PSU Banks (Median)
16.0% 14.0% 12.0% 10.0% 8.0%

6.0% 4.0% 2.0% 0.0%

Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11

Tier I Capital Adequacy

Capital Adequacy Ratio

Chart 7: Capital Adequacy of Private Banks (Median)

Chart 8: Core Capital/Total Assets

11.0%

PSU banks median capital adequacy levels declined to 12.1% as on December 31, 2011 from 13.4% as on March 31, 2011, whereas their Tier I capital moderated to 8.3% from 8.7% over the same period. The capital adequacy of all large private banks remains comfortable, with the proportion of core capital being strong. Their median capital adequacy stood at 16.3%, while the Tier I capital was at 11.2% as on December 31, 2011. The median capital adequacy of the smaller private banks was lower at 13.3% as on December 31, 2011, given the lower share of Tier II capital. However, their Tier I capital of 11.1% was comparable with that of large private banks. The capital adequacy ratio of most banks as of December 2011 excludes the unaudited profits earned in 9M, FY2012, and 12 PSU banks had a Tier I capital adequacy of less than 8% as on December 31, 2011, as against only four banks as on March 31, 2011. While ICRA sees an improvement of 30-60 bps in the median capital adequacy capital by March 2012, several banks, including SBI, IOB and CBI, are expecting capital infusion by the government in the current fiscal (around Rs. 20,000 crore in total), which would provide capital to absorb shocks and support growth in the medium term. While Government of India ownership and the systemic importance of PSU banks could ensure sovereign support going forward, it would be important for PSU banks in the public sector to maintain prudent capitalisation levels so as to prevent deterioration in credit profile, going forward. In the case of private banks, the large ones and certain smaller banks like ING and KVB have been able to raise equity in the year to December 2011, even as other regionally-focused smaller banks face shortage of capital for growth and are seeking to increase the proportion of Tier II capital. Nationalised banks core capital as a percentage of total assets has reported steady improvement since March 2010 following strong internal accruals in FY2011. While accruals have moderated in the current fiscal, lower credit growth has helped them maintain a steady improvement in core capital. The SBI Group too reported an improvement in core capitalisation in 9M, FY2012, after a steep decline in March 2011 because of large one-time provisions. Private banks core capital as a percentage of total assets remained comfortable at 9.8% as on December 31, 2011, marginally lower than the 10.0% as of March 2011.

10.0%
9.0% 8.0% 7.0%

6.0%
5.0% 4.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Source: ICRA Research; Banks

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Attractive interest rates ensure steady growth in term deposits even as CASA drops
Chart 9: Deposits Growth (yoy)
30.0%
25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Mar-10

Jun-10 SBI Group

Sep-10 Dec-10 Mar-11 Jun-11 Nationalised Banks Private Banks

Sep-11 Dec-11 All Banks

Chart 10: Trend in CASA Ratio

45.0% 40.0%
35.0% 30.0% 25.0%

20.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Overall deposits growth has remained stable in the current fiscal at 19.1% yoy as on December 31, 2011 and March 2011. Private banks reported a robust yoy deposits growth of 24.4% during 9M, FY2012, higher than the PSU banks 18.2%. Given the higher interest rates offered on term deposits, the CASA levels of PSU banks came under some pressure during the last few quarters and declined to 31.1% as on December 31, 2011 from 33.2% as on March 31, 2011. While the SBI Group continued to hold a strong CASA share of 41.3% as on December 31, 2011, Nationalised Banks CASA levels declined sharply to 27.0% from 29.4% as on March 31, 2011. Large private banks continue to hold a strong CASA share in excess of 40% as on December 31, 2011. However, the smaller and regionally-focused banks CASA ratio has been declining over the last few years and remains under pressure, with the result that there has been a sharper rise in their cost of funds compared to other private banks. While PSU banks and large private banks with a strong retail franchise have not revised the interest rate on savings deposits so far, a few small private banks (with a cumulative market share of around 2.7%) have of late gained some traction in savings deposits by offering higher interest rates. While it is still premature to assess the impact of savings rate deregulation, the retail franchise of the PSU banks and large private banks would help them maintain their share in savings deposits. The smaller banks, which are now competing for retail deposits mainly by offering higher interest rates, could face pressure, going forward, as systemic interest rates decline. Dependence on wholesale sources could remain relatively high for these banks. The aggregate quarterly cost of funds increased from 5.7% in the quarter ended March 2011 to 6.7% in the quarter ended December 2011 because of a combination of increase in term deposit interest rates and a reduction in CASA levels.

Source: ICRA Research; Banks

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Net interest margins and interest spreads remain stable; increase in cost of funds passed on to borrowers
Chart 11: Trend in Net Interest Margin (qoq)
3.6%
3.4% 3.2%

3.0%
2.8% 2.6% 2.4% 2.2% 2.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Chart 12: Trend in Non-Interest Income (excl. trading income)

2.0%
1.8% 1.6%

1.4%
1.2% 1.0%

0.8%
0.6% 0.4% Mar-10 Jun-10 SBI Group Sep-10 Dec-10 Mar-11 Jun-11 Private Banks Sep-11 Dec-11

Nationalised banks reported a stable net interest margin (NIM) of 2.7% in Q3, FY2012 as lending yields stabilised at 10.9% while there was a marginal 10 bps sequential increase in the cost of funds to 6.9%. After a decline in NIM in Q1, FY2012 to 3.0%, private banks passed on the increase in funding cost to borrowers in Q2, FY2012; in Q3, FY2012 the NIMs remained stable as there were no base rate increases that quarter. The interest spread improved marginally from 2.5% to 2.6% sequentially in Q3, FY2012 from Q2, FY2012. The SBI Group has reported a sharp rise in NIM in the current fiscal with the yield on investments shooting up from 6.9% in Q4, FY2011 to 8.8% in Q3, FY2012 and the lending yield rising from 9.2% to 10.6%. Even as systemic interest rates are set to soften over the next few quarters, the banking system is unlikely to pass on the benefit of the same to borrowers, given the fixed-rate medium-term resources mobilised during the last few quarters. Aggregate other income level (excluding trading income) has remained stable at 1.0% of average assets in the current fiscal. The non-interest income levels of private banks have been historically superior to that of PSU banks, which have traditionally focused on fund-based business. The SBI Group has historically had a higher share of government business, which has helped it earn higher non-interest income as compared with Nationalised Banks. Treasury income for all banks under review remained moderate in Q3, FY2012. However, dependence on trading gains for profitability has remained marginal for private banks and most Nationalised Banks in the past as well. The SBI Group reported trading losses of Rs. 1,090 crore in Q3, FY2012 as SBI offloaded certain equity investments in Q3, FY2012 and reversed the mark-to-market provisions held against these investments.

Nationalised Banks

All Banks

Source: ICRA Research; Banks

Operating costs likely to remain stable; core profitability could be impacted by increase in loan-loss provisions
Chart 13: Trend in Operating Cost (qoq)
2.4%
2.2% 2.0% 1.8%

1.6%
1.4% 1.2% 1.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Operating costs of all banks remained stable in Q3, FY2012; PSU banks cost levels stabilised at 1.6% in the current fiscal after a sharp rise in Q4, FY2011 following absorption of arrears against staff retirement costs. Most banks continue to amortise the transitional staff-retirement costs in the current fiscal. Private banks operating costs remained steady during 9M, FY2012 supported by a moderate improvement in operating cost reported by large private banks. Small private banks operating costs remained stable in Q3, FY2012 after a sharp rise in Q4, FY2011 as certain small private banks absorbed one-time staff retirement costs in that quarter. Over the medium term, banks expansion plans are likely to be in line with business growth, and operating costs could marginally improve as a result of better efficiency. However, amortisation of transitional staff retirement costs over the next few years could moderate improvements in operating efficiency.

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Chart 14: Trend in Provisions (qoq)

1.4% 1.2% 1.0% 0.8%

0.6%
0.4% 0.2% 0.0% Mar-10

Jun-10 SBI Group

Sep-10

Dec-10

Mar-11

Jun-11 Private Banks

Sep-11

Dec-11

Nationalised Banks

All Banks

Provisions of Nationalised Banks have remained largely steady at 0.9% in Q2, FY2012 and Q3, FY2012 in the absence of any significant movement in NPA levels, and with a decline of 10-15% in the provision cover of most banks. In the case of the SBI Group, the sharp fall in provisions in Q3, FY2012 is on account of the Rs. 817 crore reversal of equity investment depreciation; adjusted for this, the decline in loan loss provisioning works out to a modest 10 bps over Q2, FY2012. Provisions for private banks have remained stable at 0.4% of average assets over the last four quarters, with ICICI and HDFC reporting a steady sequential improvement on this front over the last eight quarters. However, smaller banks have reported an increase in provisions because of higher slippages. In ICRAs opinion, the loan-loss provisions of Nationalised Banks could continue to increase as there could be a further rise in the size of restructured loans portfolio and NPAs. While the benefit of investments depreciation reversal could be available over the next few quarters, overall, provisions could continue to increase on account of loan-loss provisions.

Source: ICRA Research

PSU banks net profitability remains stable; SBI Group and private banks report improvement
Chart 15: Trend in Quarterly Net Profitability (annualised)
1.8% 1.6%

1.4%
1.2% 1.0% 0.8% 0.6% 0.4% 0.2% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

After a steep fall in Q4, FY2011 and Q1, FY2012, PSU banks net profitability stabilised at 0.9% in the last two quarters, backed by stable NIMs and operating cost levels. Almost all private banks have reported a sharp rise in net profitability during the last two years on the back of stronger non-interest income and lower provisions. The SBI Group has reported a sharp improvement in profitability since Q4, FY2012, drawing on a decline in provisions and improvement in interest margins. With systemic interest rates likely to soften, ICRA expects the NIMs of banks with a higher proportion of wholesale deposits to shrink marginally, even as other banks would likely register stable NIMs. Further, aggressive reduction in base rates would have an adverse impact on interest margins. Incremental profitability would be driven largely by the movement in asset quality and the related level of loan-loss provisions, although the softening interest rate environment could provide some headroom to reduce provisioning requirement on banks investment books.

Chart 16: Trend in Quarterly Return on Net Worth (annualised)

25.0% 20.0%

15.0%
10.0% 5.0% 0.0% Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

SBI Group

Nationalised Banks

Private Banks

All Banks

Source: ICRA Research

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Summing up
Amidst a slowdown in credit offtake and an increasing interest rate scenario that prevailed during the review period, Indian Banks have reported largely stable interest margins. Lending yields, which increased by 110 bps for the banks reviewed by ICRA in H1, FY2012, showed signs of stabilising in Q3, FY2012 as there was no further increase in banks base lending rates in that quarter; lending yields increased by just 10 bps in Q3, FY2012, taking the overall increase to 120 bps in the period under review. Aggregate cost of funds for banks increased by around 90 basis points in the same period. Even as interest rates are expected to turn benign over the next few quarters, cost of funds for the banking system may not reduce sharply over next two quarters given the significant share of fixed-rate, medium-term resources mobilised. Further, elevated level of loan loss provisions would also constrain banks from reducing the lending yields without unduly impacting their profitability; although declining interest rates may give some leeway to the banks as provisioning requirement on the investment book could reduce. Gross NPAs of Nationalised Banks increased by 50 bps as on March 31, 2011 to 2.4% as on December 31, 2011, while those of SBI Group increased sharply by 130 basis points to 4.3% from 3.0% during this period; Gross NPAs of private banks moderated to 2.1% from 2.3% during the same period. Although the stress level in the operating environment could ease out, ICRA anticipates a further deterioration in the quality of banks credit portfolio due to structural weaknesses in certain sectors and an increasing proportion of restructured loans. Government of Indias commitment to infuse capital in certain PSU banks is likely to provide cushion to absorb shocks and support growth, over the medium term.

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Annexure 1: Quarterly Performance Analysis All Banks

(Rs. crore) no. of months PROFIT AND LOSS ACCOUNT Interest / Discount on Advances / Bills Interest / Dividend on Investments Interest on RBI Bal.& Other Banks Others Total Interest Income Interest Expense Net Interest Income Non-Interest Income Operating Income Operating Expenses Operating Profits Provisions etc. Adjusted Profit Before Tax Trading Profits Profit Before Tax Tax Profit After Tax BALANCE SHEET Share Capital Reserves Net worth Total Deposits Advances Investments Total Assets KEY RATIOS (Q-o-Q Basis) Yield on Average Advances Yield on Average Investments Yield on Average Earning Assets Cost of Average Interest Bearing Funds Gross Interest Spread PROFITABILITY RATIOS Net Interest Margin/Average Average Assets Non-Interest Income/Average Average Assets Operating Expenses/Average Total Assets Operating Profit / Average Total Assets Provisions/Average Total Assets QE Dec-11 3 QE Sep-11 3 QE Jun-11 3 QE Mar-11 3 QE Dec-10 3 QE Sep-10 3 QE Jun-10 3 QE Mar-10 3

119,423 36,728 1,493 901 158,546 106,288 52,259 17,217 69,475 30,506 38,969 13,467 25,503 267 25,769 7,273 18,496

113,456 34,602 1,370 991 150,419 100,836 49,584 16,409 65,992 29,768 36,224 13,914 22,310 1,040 23,350 6,454 16,896

105,833 31,887 1,542 879 140,141 93,946 46,194 15,550 61,744 27,981 33,763 12,961 20,801 1,019 21,821 6,946 14,875

95,205 29,774 1,265 1,585 127,829 81,582 46,248 19,696 65,944 32,866 33,078 12,653 20,425 1,235 21,660 6,989 14,671

87,864 29,012 997 1,221 119,094 72,778 46,316 14,602 60,918 27,131 33,787 10,066 23,721 1,184 24,905 7,674 17,230

81,513 27,334 1,026 1,043 110,917 68,083 42,834 14,974 57,808 26,454 31,354 10,702 20,652 931 21,584 6,333 15,251

76,831 25,627 1,277 557 104,291 65,205 39,086 13,866 52,952 23,678 29,274 8,743 20,530 1,771 22,301 7,042 15,259

72,685 24,408 1,002 1,154 99,249 63,095 36,155 16,757 52,912 24,312 28,600 11,779 16,821 1,897 18,718 5,381 13,338

14,879 449,651 464,531 5,801,677 4,488,384 1,893,291 7,252,788

14,910 424,945 439,854 5,611,358 4,261,410 1,883,110 6,942,029

14,914 404,591 419,505 5,393,291 4,134,290 1,789,553 6,747,210

14,749 388,122 402,871 5,356,569 4,088,553 1,744,818 6,652,151

13,991 375,902 389,893 4,869,907 3,773,574 1,656,770 6,114,376

13,740 357,652 371,392 4,733,535 3,543,467 1,618,718 5,849,772

13,523 337,671 351,194 4,517,979 3,438,827 1,594,744 5,657,423

13,676 322,512 336,187 4,498,375 3,330,937 1,548,046 5,548,503

10.92% 7.78% 9.32% 6.71% 2.61%

10.81% 7.54% 9.13% 6.58% 2.55%

10.30% 7.22% 8.67% 6.28% 2.39%

9.69% 7.00% 8.32% 5.75% 2.57%

9.61% 7.09% 8.26% 5.46% 2.80%

9.34% 6.80% 7.95% 5.31% 2.64%

9.08% 6.52% 7.67% 5.23% 2.44%

9.12% 6.44% 7.70% 5.34% 2.36%

2.95% 0.97% 1.72% 2.20% 0.76%

2.90% 0.96% 1.74% 2.12% 0.81%

2.76% 0.93% 1.67% 2.02% 0.77%

2.90% 1.23% 2.06% 2.07% 0.79%

3.10% 0.98% 1.81% 2.26% 0.67%

2.98% 1.04% 1.84% 2.18% 0.74%

2.79% 0.99% 1.69% 2.09% 0.62%

2.71% 1.26% 1.82% 2.14% 0.88%

ICRA LIMITED

Page 11 of 19

(Rs. crore) no. of months Core Profit before Tax (Net Interest Income+Fee Income-Operating Expenses-Provisions)/ Average Total Assets Net Interest Income Less Provisions/ Average Total Assets Net profit on sale of securities & assets / Average Total Assets Profit before Tax / Average Total Assets Profit after Tax / Average Total Assets Profit after Tax/ Average Net worth EFFICIENCY RATIOS Other Income / Operating Expenses Operating Cost to Operating Income Ratio CAPITALISATION RATIOS Core Capital / Total Assets Total Debt / Net worth CRAR Tier I Capital / Risk Weighted Assets Tier II Capital / Risk Weighted Assets COVERAGE RATIOS Total Interest Coverage Fund Based Coverage LIQUIDITY RATIOS Total Liquid Assets /Total Liability Total Advances/Total Deposits ASSET QUALITY Gross NPAs Net NPAs Gross NPAs / Gross Advances Net NPAs / Net Advances Operating Profits (Annualised) / Net NPAs Net NPAs / Networth Provision Cover DEPOSIT RATIOS Demand Deposits / Total Deposits Savings Deposits / Total Deposits Term Deposits / Total Deposits

QE Dec-11 3 1.44% 2.19% 0.02% 1.45% 1.04% 16.36%

QE Sep-11 3 1.30% 2.08% 0.06% 1.36% 0.99% 15.73%

QE Jun-11 3 1.24% 1.98% 0.06% 1.30% 0.89% 14.47%

QE Mar-11 3 1.28% 2.11% 0.08% 1.36% 0.92% 14.80%

QE Dec-10 3 1.59% 2.42% 0.08% 1.67% 1.15% 18.11%

QE Sep-10 3 1.44% 2.23% 0.06% 1.50% 1.06% 16.88%

QE Jun-10 3 1.47% 2.17% 0.13% 1.59% 1.09% 17.76%

QE Mar-10 3 1.26% 1.83% 0.14% 1.40% 1.00% 16.01%

56.44% 43.91%

55.12% 45.11%

55.57% 45.32%

59.93% 49.84%

53.82% 44.54%

56.60% 45.76%

58.56% 44.72%

68.93% 45.95%

6.40% 13.89 12.90% 8.86% 4.04%

6.34% 14.15 13.08% 9.02% 4.06%

6.22% 14.37 13.39% 9.18% 4.21%

6.06% 14.75 13.75% 9.36% 4.39%

6.38% 13.88 13.61% 9.14% 4.47%

6.35% 14.13 14.07% 9.18% 4.88%

6.21% 14.27 13.96% 9.26% 4.70%

6.06% 14.76 14.08% 9.42% 4.66%

1.37 1.20

1.36 1.20

1.36 1.19

1.41 1.16

1.46 1.26

1.46 1.24

1.45 1.24

1.45 1.19

33.74% 77.36%

34.82% 75.94%

35.09% 76.66%

35.18% 76.33%

34.24% 77.49%

36.32% 74.86%

36.26% 76.11%

37.02% 74.05%

129,284 61,807 2.84% 1.38% 252% 13.31% 52.19% 32.33% 7.43% 24.90% 65.21%

117,693 55,720 2.72% 1.31% 260% 12.67% 52.66% 33.11% 7.90% 25.21% 66.87%

100,574 43,286 2.40% 1.05% 312% 10.32% 56.96% 33.99% 8.38% 25.60% 66.13%

93,828 40,544 2.27% 0.99% 326% 10.06% 56.79% 34.63% 9.66% 24.97% 65.37%

90,029 38,037 2.35% 1.01% 355% 9.76% 57.75% 34.38% 8.53% 25.85% 64.54%

87,868 37,937 2.45% 1.07% 331% 10.21% 56.83% 34.47% 8.69% 25.78% 64.59%

82,893 37,048 2.38% 1.08% 316% 10.55% 55.31% 33.86% 8.41% 25.45% 64.70%

78,018 36,244 2.31% 1.09% 316% 10.78% 53.54% 34.98% 11.17% 23.81% 65.02%

Source: Banks Press Releases, ICRA Research

ICRA LIMITED

Page 12 of 19

Annexure 2: Quarterly Performance Analysis Public Banks

(Rs. crore) no. of months PROFIT AND LOSS ACCOUNT Interest / Discount on Advances / Bills Interest / Dividend on Investments Interest on RBI Bal.& Other Banks Others Total Interest Income Interest Expense Net Interest Income Non-Interest Income Operating Income Operating Expenses Operating Profits Provisions etc. APBT Trading Profits PBT Tax PAT BALANCE SHEET Share Capital Reserves Net worth Total Deposits Advances Investments Total Assets KEY RATIOS (Q-o-Q Basis) Yield on Average Advances Yield on Average Investments Yield on Average Earning Assets Cost of Average Interest Bearing Funds Gross Interest Spread PROFITABILITY RATIOS Net Interest Margin/Average Average Assets Non-Interest Income/Average Average Assets Operating Expenses/Average Total Assets Operating Profit / Average Total Assets Provisions/Average Total Assets QE Dec-11 3 QE Sep-11 3 QE Jun-11 3 QE Mar-11 3 QE Dec-10 3 QE Sep-10 3 QE Jun-10 3 QE Mar-10 3

94,977 27,780 1,241 559 124,557 84,110 40,446 11,067 51,514 22,321 29,193 11,963 17,230 161 17,391 4,805 12,587

90,487 26,388 1,157 547 118,578 80,154 38,424 10,869 49,293 21,908 27,385 12,481 14,904 1,003 15,908 4,205 11,702

84,757 24,478 1,310 482 111,027 75,250 35,777 10,408 46,185 20,623 25,562 11,425 14,136 915 15,051 4,952 10,099

76,009 22,876 1,050 1,204 101,139 65,501 35,639 13,942 49,581 25,186 24,395 11,208 13,187 1,249 14,437 4,774 9,663

70,493 22,419 764 859 94,536 58,347 36,189 9,608 45,797 20,188 25,609 8,329 17,280 946 18,226 5,666 12,560

65,350 21,289 843 635 88,116 54,743 33,373 10,237 43,610 19,998 23,612 8,661 14,951 890 15,841 4,661 11,180

61,813 20,251 1,079 211 83,354 53,029 30,325 9,634 39,959 17,660 22,299 6,594 15,705 1,303 17,008 5,408 11,600

58,048 19,431 801 786 79,065 51,528 27,537 12,066 39,603 18,239 21,363 9,448 11,916 1,580 13,496 3,651 9,845

10,421 300,011 310,432 4,704,283 3,601,071 1,417,609 5,677,374

10,421 281,575 291,996 4,550,871 3,407,978 1,421,512 5,442,681

10,421 267,482 277,903 4,402,986 3,333,574 1,361,198 5,355,068

10,290 256,483 266,773 4,372,984 3,305,632 1,328,534 5,276,987

9,669 246,642 256,311 3,979,816 3,037,648 1,278,051 4,856,855

9,430 233,171 242,601 3,841,811 2,851,225 1,238,015 4,615,621

9,377 221,122 230,498 3,700,876 2,787,341 1,232,251 4,510,053

9,376 209,619 218,995 3,691,800 2,709,396 1,198,961 4,417,746

10.84% 7.83% 9.30% 6.68% 2.63%

10.74% 7.59% 9.10% 6.55% 2.55%

10.21% 7.28% 8.64% 6.27% 2.37%

9.59% 7.02% 8.28% 5.75% 2.54%

9.58% 7.13% 8.27% 5.46% 2.81%

9.27% 6.89% 7.94% 5.31% 2.63%

9.00% 6.66% 7.67% 5.27% 2.40%

8.97% 6.65% 7.69% 5.41% 2.28%

2.91% 0.80% 1.61% 2.10% 0.86%

2.85% 0.81% 1.62% 2.03% 0.92%

2.69% 0.78% 1.55% 1.92% 0.86%

2.81% 1.10% 1.99% 1.93% 0.88%

3.06% 0.81% 1.70% 2.16% 0.70%

2.93% 0.90% 1.75% 2.07% 0.76%

2.72% 0.86% 1.58% 2.00% 0.59%

2.59% 1.14% 1.72% 2.01% 0.89%

ICRA LIMITED

Page 13 of 19

(Rs. crore) no. of months Core Profit before Tax (Net Interest Income+Fee Income-Operating Expenses-Provisions)/ Average Total Assets Net Interest Income Less Provisions/ Average Total Assets Net profit on sale of securities & assets / Average Total Assets Profit before Tax / Average Total Assets Profit after Tax / Average Total Assets Profit after Tax/ Average Net worth EFFICIENCY RATIOS Other Income / Operating Expenses Operating Cost to Operating Income Ratio CAPITALISATION RATIOS Core Capital / Total Assets Total Debt / Net worth CRAR Tier I Capital / Risk Weighted Assets Tier II Capital / Risk Weighted Assets COVERAGE RATIOS Total Interest Coverage Fund Based Coverage LIQUIDITY RATIOS Total Liquid Assets /Total Liability Total Advances/Total Deposits ASSET QUALITY Gross NPAs Net NPAs Gross NPAs / Gross Advances Net NPAs / Net Advances Operating Profits (Annualised) / Net NPAs Net NPAs / Networth Provision Cover DEPOSIT RATIOS Demand Deposits / Total Deposits Savings Deposits / Total Deposits Term Deposits / Total Deposits

QE Dec-11 3 1.24% 2.05% 0.01% 1.25% 0.91% 16.71%

QE Sep-11 3 1.10% 1.92% 0.07% 1.18% 0.87% 16.43%

QE Jun-11 3 1.06% 1.83% 0.07% 1.13% 0.76% 14.83%

QE Mar-11 3 1.04% 1.93% 0.10% 1.14% 0.76% 14.78%

QE Dec-10 3 1.46% 2.35% 0.08% 1.54% 1.06% 20.14%

QE Sep-10 3 1.31% 2.17% 0.08% 1.39% 0.98% 18.90%

QE Jun-10 3 1.41% 2.13% 0.12% 1.52% 1.04% 20.65%

QE Mar-10 3 1.12% 1.70% 0.15% 1.27% 0.93% 18.21%

49.58% 43.33%

49.61% 44.44%

50.47% 44.65%

55.36% 50.80%

47.59% 44.08%

51.19% 45.86%

54.55% 44.20%

66.15% 46.06%

5.47% 16.51 12.15% 8.16% 3.99%

5.36% 16.96 12.35% 8.32% 4.04%

5.19% 17.40 12.63% 8.47% 4.15%

5.06% 17.88 13.12% 8.69% 4.44%

5.28% 16.95 12.86% 8.39% 4.47%

5.26% 17.31 13.25% 8.29% 4.96%

5.11% 17.54 13.22% 8.46% 4.76%

4.96% 18.29 13.28% 8.56% 4.73%

1.35 1.22

1.34 1.21

1.34 1.20

1.37 1.16

1.44 1.27

1.43 1.24

1.42 1.24

1.41 1.18

0.33 0.77 55.01% 110,292 57,194 3.02% 1.59% 204% 18.42% 48.14% 29.56% 5.39% 24.17% 62.31%

0.34 0.75 42.95% 98,797 51,207 2.86% 1.50% 214% 17.54% 48.17% 31.54% 6.87% 24.67% 63.88%

0.34 0.76 26.57% 81,971 38,834 2.43% 1.16% 263% 13.97% 52.63% 31.47% 6.74% 24.74% 62.66%

0.34 0.76 25.12% 75,156 36,072 2.25% 1.09% 271% 13.52% 52.00% 33.04% 8.28% 24.76% 66.97%

0.33 0.76

0.35 0.74

0.36 0.75

0.36 0.73 33.02% 60,069 29,689 2.19% 1.10% 288% 13.56% 50.58% 34.05% 10.04% 24.02% 65.95%

71,153 33,043 2.31% 1.09% 310% 12.89% 53.56% 34.03% 8.10% 25.93% 64.64%

69,112 32,479 2.39% 1.14% 291% 13.39% 53.00% 34.19% 15.92% 18.27% 64.65%

64,764 31,193 2.30% 1.12% 286% 13.53% 51.84% 33.78% 8.56% 25.21% 64.30%

Source: Banks Press Releases, ICRA Research

ICRA LIMITED

Page 14 of 19

Annexure 3: Quarterly Performance Analysis Private Banks

(Rs. crore) no. of months PROFIT AND LOSS ACCOUNT Interest / Discount on Advances / Bills Interest / Dividend on Investments Interest on RBI Bal.& Other Banks Others Total Interest Income Interest Expense Net Interest Income Non-Interest Income Operating Income Operating Expenses Operating Profits Provisions etc. Adjusted Profit Before Tax Trading Profits Profit Before Tax Tax expense Profit after Tax BALANCE SHEET Share Capital Reserves Net worth Deposits Advances Investments Total Assets KEY RATIOS (QoQ Basis) Yield on Average Advances Yield on Average Investments Yield on Average Earning Assets Cost of Average Interest Bearing Funds Gross Interest Spread PROFITABILITY RATIOS Net Interest Margin/Average Average Assets Non-Interest Income/Average Average Assets Operating Expenses/Average Total Assets Operating Profit / Average Total Assets Provisions/Average Total Assets QE Dec-11 3 QE Sep-11 3 QE Jun-11 3 QE Mar-11 3 QE Dec-10 3 QE Sep-10 3 QE Jun-10 3 QE Mar-10 3

24,163 8,867 252 343 33,625 21,876 11,749 6,123 17,871 8,059 9,813 1,503 8,309 105 8,415 2,468 5,946

22,476 8,082 213 444 31,214 20,200 11,014 5,479 16,493 7,686 8,807 1,411 7,396 35 7,432 2,245 5,186

20,635 7,301 230 396 28,562 18,279 10,283 5,072 15,355 7,185 8,170 1,512 6,658 104 6,762 1,991 4,771

18,778 6,804 213 379 26,174 15,728 10,446 5,683 16,129 7,487 8,642 1,430 7,212 (16) 7,196 2,206 4,990

17,025 6,492 230 362 24,109 14,124 9,984 4,946 14,930 6,774 8,156 1,725 6,430 237 6,667 2,005 4,662

15,880 5,957 181 409 22,428 13,079 9,349 4,684 14,033 6,312 7,721 2,029 5,692 42 5,734 1,668 4,066

14,765 5,301 195 346 20,607 11,941 8,666 4,188 12,854 5,890 6,963 2,145 4,819 465 5,283 1,632 3,652

14,405 4,909 199 368 19,881 11,350 8,531 4,633 13,164 5,966 7,198 2,322 4,876 315 5,191 1,722 3,469

4,373 148,927 153,300 1,083,988 877,760 471,355 1,559,483

4,372 142,140 146,512 1,037,263 836,500 454,375 1,472,500

4,376 135,887 140,264 968,441 784,724 421,721 1,367,007

4,343 130,423 134,765 962,329 767,636 409,954 1,351,124

4,207 128,073 132,280 871,489 722,405 372,822 1,235,989

4,197 123,309 127,506 874,461 679,875 375,502 1,214,116

4,059 115,804 119,863 802,152 641,487 357,375 1,130,344

4,216 112,203 116,419 792,498 612,068 344,767 1,115,037

11.28% 7.66% 9.40% 6.83% 2.57%

11.09% 7.38% 9.22% 6.70% 2.53%

10.63% 7.02% 8.79% 6.33% 2.46%

10.08% 6.95% 8.43% 5.73% 2.70%

9.71% 6.94% 8.19% 5.44% 2.76%

9.61% 6.50% 8.00% 5.27% 2.73%

9.42% 6.04% 7.67% 5.04% 2.64%

9.74% 5.74% 7.74% 5.06% 2.68%

3.10% 1.62% 2.13% 2.59% 0.40%

3.10% 1.54% 2.17% 2.48% 0.40%

3.03% 1.49% 2.11% 2.40% 0.44%

3.23% 1.76% 2.32% 2.67% 0.44%

3.26% 1.61% 2.21% 2.66% 0.56%

3.19% 1.60% 2.15% 2.63% 0.69%

3.09% 1.49% 2.10% 2.48% 0.76%

3.17% 1.72% 2.22% 2.67% 0.86%

ICRA LIMITED

Page 15 of 19

(Rs. crore) no. of months Core Profit before Tax (Net Interest Income+Fee Income-Operating Expenses-Provisions)/ Average Total Assets Net Interest Income Less Provisions/ Average Total Assets Net profit on sale of securities & assets / Average Total Assets Profit before Tax / Average Total Assets Profit after Tax / Average Total Assets Dividend / Profit after Tax Profit after Tax/ Average Net worth EFFICIENCY RATIOS Other Income / Operating Expenses Operating Cost to Operating Income Ratio CAPITALISATION RATIOS Core Capital / Total Assets Total Debt / Net worth CRAR Tier I Capital / Risk Weighted Assets Tier II Capital / Risk Weighted Assets COVERAGE RATIOS Total Interest Coverage Fund Based Coverage LIQUIDITY RATIOS Total Liquid Assets /Total Liability Total Advances/Total Deposits ASSET QUALITY Gross NPAs Net NPAs Gross NPAs / Gross Advances Net NPAs / Net Advances Operating Profits (Annualised) / Net NPAs Net NPAs / Networth Provision Cover DEPOSIT RATIOS Demand Deposits / Total Deposits Savings Deposits / Total Deposits Term Deposits / Total Deposits

QE Dec-11 3 2.19% 2.70% 0.03% 2.22% 1.57% 0.00% 15.87%

QE Sep-11 3 2.08% 2.71% 0.01% 2.09% 1.46% 0.00% 14.47%

QE Jun-11 3 1.96% 2.58% 0.03% 1.99% 1.40% 0.00% 13.88%

QE Mar-11 3 2.23% 2.79% -0.01% 2.23% 1.54% 0.00% 14.95%

QE Dec-10 3 2.10% 2.70% 0.08% 2.18% 1.52% 0.00% 14.36%

QE Sep-10 3 1.94% 2.50% 0.01% 1.96% 1.39% 0.00% 13.15%

QE Jun-10 3 1.72% 2.32% 0.17% 1.88% 1.30% 0.00% 12.36%

QE Mar-10 3 1.81% 2.31% 0.12% 1.93% 1.29% 0.00% 11.99%

75.98% 45.09%

71.29% 46.60%

70.60% 46.79%

75.90% 46.42%

73.01% 45.37%

74.21% 44.98%

71.10% 45.83%

77.66% 45.32%

9.83% 8.57 15.76% 11.48% 4.28%

9.95% 8.53 15.89% 11.69% 4.21%

10.26% 8.30 16.50% 12.01% 4.49%

9.97% 8.52 16.35% 12.08% 4.27%

10.70% 7.92 16.69% 12.15% 4.53%

10.50% 8.09 17.29% 12.63% 4.66%

10.60% 7.96 17.07% 12.55% 4.52%

10.44% 8.09 17.36% 12.90% 4.46%

1.45 1.17

1.44 1.16

1.45 1.17

1.55 1.19

1.58 1.23

1.59 1.23

1.58 1.23

1.63 1.23

0.38 0.81

0.38 0.81

0.38 0.81

0.39 0.80

0.38 0.83

0.40 0.78

0.39 0.80

0.41 0.77

18,919 4,579 2.12% 0.52% 857% 2.99% 75.80%

18,631 4,411 2.19% 0.53% 799% 3.01% 76.32%

18,541 4,430 2.32% 0.56% 738% 3.16% 76.11%

18,413 4,335 2.36% 0.56% 797% 3.22% 76.45%

18,594 4,841 2.53% 0.67% 674% 3.66% 73.96%

18,478 5,305 2.67% 0.78% 582% 4.16% 71.29%

17,905 5,748 2.74% 0.90% 485% 4.80% 67.90%

17,722 6,443 2.84% 1.05% 447% 5.53% 63.64%

14.53% 23.30% 62.17%

13.80% 23.48% 62.72%

13.72% 23.76% 62.51%

15.23% 26.14% 58.63%

13.12% 25.84% 61.03%

14.65% 24.21% 61.14%

12.97% 24.57% 63.23%

16.53% 22.95% 60.52%

Source: Banks Press Releases, ICRA Research

ICRA LIMITED

Page 16 of 19

Annexure 4: Details of Restructured Advances

Bank Allahabad Andhra BoB BoI BoM CAN CBI Corp Dena IDBI Indian IOB OBC PNB UCO Union United Nationalised Banks SBI SBH SBI Group Total PSU Banks CUB ING KVB HDFC ICICI Axis IndusInd KMBL Yes Private Banks All Banks Dec-11 3.5% 4.7% 3.8% 5.9% 5.4% 4.4% 7.4% 4.9% 3.8% 6.3% 6.4% 7.7% 5.5% 6.4% 6.7% 5.5% 3.1% 5.5% 4.4% 5.0% 4.5% 5.2% 0.3% 0.3% 2.7% 0.4% 1.2% 1.8% 0.2% 0.2% 0.5% 1.0% 4.4% Mar-11 2.7% 3.5% 2.9% 5.0% 3.8% 4.1% 3.6% 2.7% 6.7% 6.9% 6.2% 4.1% 6.3% 6.4% 3.7% 4.3% 4.7% 4.5% 5.0% 4.6% 4.6% 0.3% 0.3% 2.9% 0.2% 0.7% 1.4% 0.3% 0.2% 0.2% 0.7% 3.9% Change 0.9% 1.2% 0.9% 0.9% 0.6% 3.3% 1.3% 1.1% -0.4% -0.5% 1.5% 1.4% 0.1% 0.3% 1.8% -1.2% 0.8% -0.1% 0.0% -0.1% 0.6% -0.1% 0.0% -0.2% 0.2% 0.6% 0.5% -0.1% -0.1% 0.2% 0.3% 0.5% Increase in Restructured Portfolio in YTD Dec-11 43.1% 46.9% 48.2% 28.5% 18.3% 86.6% 44.4% 48.4% -6.2% 7.3% 44.8% 55.9% 10.3% 12.3% 53.9% -22.0% 30.3% 9.5% 7.7% 9.3% 24.4% -7.0% 16.9% 16.5% 113.0% 115.3% 39.9% -2.6% -5.5% 111.9% 66.1% 25.8%

Source: ICRA Research; Banks

ICRA LIMITED

Page 17 of 19

Annexure 5: List of Banks in the current research and Abbreviations used

Bank Name Nationalised Banks: Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank Ltd. Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank Punjab And Sind Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank SBI Group: State Bank of India State Bank of Bikaner And Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore Abbreviation used Allahabad Andhra BoB BoI BoM CAN CBI Corp Dena IDBI Indian IOB OBC PNB PSB Syn UCO Union United Vijaya Bank Name Private Banks: Axis Bank Ltd. City Union Bank Ltd. Dhanlaxmi Bank Ltd. Development Credit Bank Ltd. The Federal Bank Ltd. HDFC Bank Ltd. ICICI Bank Ltd. IndusInd bank ltd. ING Vysya Bank Ltd. The Jammu & Kashmir Bank Ltd. The KVB Vysya Bank Ltd. Karnataka Bank ltd. Kotak Mahindra Bank Ltd. The Lakshmi Vilas Bank Ltd. The South Indian Bank Ltd. Yes Bank Ltd Other Terms & Abbreviations Nationalised Banks + SBI Group ICICI + HDFC + Axis Other Private banks Abbreviation used Axis CUB Dhan DCB Federal HDFC ICICI IndusInd ING JandK KVB KBL KMBL LVB SIB Yes

PSU Banks Large Private Banks Small Private Banks

SBI SBBJ SBH SBM SBOP SBT

ICRA LIMITED

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ICRA Limited
An Associate of Moody's Investors Service
CORPORATE OFFICE

Building No. 8, 2nd Floor, Tower A; DLF Cyber City, Phase II; Gurgaon 122 002 Tel: +91 124 4545300; Fax: +91 124 4545350 Email: info@icraindia.com, Website: www.icra.in
REGISTERED OFFICE

1105, Kailash Building, 11th Floor; 26 Kasturba Gandhi Marg; New Delhi 110001 Tel: +91 11 23357940-50; Fax: +91 11 23357014
Branches: Mumbai: Tel.: + (91 22) 24331046/53/62/74/86/87, Fax: + (91 22) 2433 1390 Chennai: Tel + (91 44) 2434 0043/9659/8080, 2433 0724/ 3293/3294, Fax + (91 44) 2434 3663 Kolkata: Tel + (91 33) 2287 8839 /2287 6617/ 2283 1411/ 2280 0008, Fax + (91 33) 2287 0728 Bangalore: Tel + (91 80) 2559 7401/4049 Fax + (91 80) 559 4065 Ahmedabad: Tel + (91 79) 2658 4924/5049/2008, Fax + (91 79) 2658 4924 Hyderabad: Tel +(91 40) 2373 5061/7251, Fax + (91 40) 2373 5152 Pune: Tel + (91 20) 2552 0194/95/96, Fax + (91 20) 553 9231
Copyright, 2012 ICRA Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided 'as is' without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents.

ICRA LIMITED

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