Shares of City Union Bank nosedived nearly 9% in intraday trade on the BSE on Wednesday after the Reserve Bank of India (RBI) found divergence in the provisioning of gross non-performing assets (NPAs) by the private sector lender for the financial year 2021-22. The bank in an exchange filing said the RBI has found a gross NPA divergence of ₹259 crore for FY22. The bad loans assessed by the central bank stood at ₹2,192 crore as compared to ₹1,933 crore reported by the bank.
As per the exchange filing, the central bank conducted on-site inspection for supervisory evaluation for FY22 from October 7 to November 18 and the final meeting concluded on December 19.
“The divergence was to the tune of ₹259 crore consisting of 13 borrower accounts (outstanding balance of more than ₹1 crore) for an amount of ₹230 crore and 218 borrowers (outstanding balance of less than ₹1 crore) for an amount of ₹29 crore,” City Union Bank said in the filing.
Out of the above, four accounts constituting ₹60.41 crore and one account with a balance of ₹36 lakh, totalling ₹61 crore, have already been classified as NPA during the first half-year ended September 30, 2022 (H1 FY23), it said.
The lender further added that two accounts constituting ₹4.07 crore and 55 accounts having ₹9 crore, were stands closed as on date.
Weighed down by the development, City Union Bank share price opened lower for the second straight session, down 4.2% at ₹181 compared with the previous closing price of ₹188.9 on the BSE. Extending opening losses, the banking stock declined as much as 8.9% to touch an intraday low of ₹172, while the market capitalisation slipped to ₹13,259 crore. On the volume front, there was a surge in selling activities as nearly 10 lakh shares changed hands on the BSE against the two-week average volume of 1.14 lakh stocks. In comparison, the BSE Sensex was trading 400 points lower at 61,302 levels, paring opening gains.
In the last one year, City Union Bank has delivered a positive return of 33% to its shareholders, while it has over 43% in a six-month period. The stock, however, seemed to have lost momentum in the recent past after hitting its 52-week high of ₹204.95 on December 15, 2022. It touched a 52-week low of ₹108.60 on March 7, 2022. The stock currently trades 16% lower than its 52-week high, while it has shed 12% in a week.
In the recently concluded September quarter, the Kumbakonam-headquartered bank reported 52% year-on-year (YoY) growth in its net profit at ₹276.46 crore as compared to ₹182.10 crore in the same period last year. Total income rose 11% to ₹1,354.65 crore versus ₹1,224.94 crore in the year ago period, while its net interest income grew 19% YoY to ₹567.91 crore.
On the assets side, the gross non-performing assets (NPA) declined to 4.36% from 5.58% in Q2 FY21. The net NPA also declined to 2.69% from 3.48% in the corresponding period last year. The bank made a provision of ₹180 crore as of 30 September 2022, while the provision coverage ratio (PCR) stood at 66%. The total provision towards bad and doubtful debts was ₹105 crore compared to ₹118 crore in the same period last fiscal.
Leave a Comment
Your email address will not be published. Required field are marked*