Syndicate Bank suffers losses in Q2

BENGALURU: Manipal-headquartered Syndicate Bank swung to a second-quarter loss of Rs 1,543 crore from a profit of Rs 105 crore in the year-ago quarter, after the bank earned less income and set aside more money to cover its bad loans.
For the second quarter ended September, the public sector bank saw its interest income earned on loan advances decline 3% year-over-year to Rs 5,399.31 crore.With low yields and a weak market, the bank also saw a 5% dip in income from investments to Rs 3,804 crore. Total income of the bank dipped 8% to Rs 5,889 crore, compared to the year-ago quarter.
In treasury operations, Syndicate Bank swung to a loss of Rs 498 crore, compared to a profit of 523 crore last year. The bank's biggest losses came from its corporate portfolio, where losses widened to Rs 1,192 crore, from Rs 741 crore the previous year. Its retail banking operations saw income fall 70% to Rs 224 crore.
On whether the bank will realign its strategy, Syndicate Bank MD Mrutyunjay Mahapatra said, "This quarter was not about growth. It was about consolidating our business and managing our risk profile. The bank has taken a decision to move from high-risk assets to low-risk assets."
Mahapatra also said the bank might increase its focus on retail, agriculture and SME loans. "We are looking at higher volumes and lower risk," he said.
The bank also set aside more money to cover its bad loans, with provisions more than doubling to Rs 2,217 crore, from Rs 891 crore.
"We wanted to provision against all possible loan losses, employee expenses, mark-to-market loan losses in this quarter itself. So that in the upcoming quarters, the bank will show better results," said Mahapatra.
The bank's asset quality seems to have worsened as gross non-performing assets (NPAs) as a percentage of loan advances increased to 12.98% from 9.39% last year. Net NPAs also rose to 6.83% from 5.76%. Even on a sequential basis, the bank's gross and net NPA figures fared slightly worse.