Banks with lower NPA percentages are perceived as more stable and credible. They have a more robust loan portfolio and a reduced risk of default, both of which are crucial for financial stability.
A lower NPA ratio, on the other hand, does not always mean that a bank is fully risk-free. Market circumstances, economic slowdowns, and changes in government laws can all have an impact on a bank’s financial health.
Non-performing assets(NPA): Loan or advance for which the principal or interest payment has remained overdue for a period of time, usually 90 days or more.
Listed below are three banking stocks that have reduced their NPA in FY24
RBL Bank
On Wednesday, the shares of RBL Bank closed at ₹251.6 a share, up 1.55 percent on the stock exchange. The company has a market capitalization of ₹ 15,178 crores.
According to a recent report, RBL Bank’s NPA decreased by 36 points, from 1.10 percent in Q4 FY23 to 0.74 percent in Q4 FY24. During the same period, Net NPA reduced from ₹772 crore to ₹619 crore.
The bank’s interest income experienced a slight year-on-year increase of 32%, from ₹1,211 crore in Q4 FY23 to ₹1,599 crore in Q4 FY24. Furthermore, there was a notable 30% increase in net profit, from ₹271 crore to ₹352 crore.
Indian Overseas Bank
On Wednesday, the shares of Indian Overseas Bank closed ₹66.95 a share, down 0.22 percent on the stock exchange. The company has a market capitalization of ₹ 1,26,551 crores.
The NPA decreased from 1.83% in Q4 FY23 to 0.57% in Q4 FY24, which is a reduction of 126 basis points. The Net NPA reduced from ₹3,266 crore to ₹1,216 crore during the same time frame.
Banks’ interest income rose 21% year-on-year, from ₹2,276 crore in Q4FY23 to ₹2,763 crore in Q4FY24. Additionally, net profit saw a significant 24% increase, rising from ₹650 crore to ₹808 crore.
Jammu and Kashmir Bank Ltd.
On Wednesday, the shares of Indian Overseas Bank closed ₹129.95 a share, down 0.12 percent on the stock exchange. The company has a market capitalization of ₹14,243 crores.
The Jammu and Kashmir Bank’s NPA decreased from 1.62% in Q4 FY23 to 0.79% in Q4 FY24, which is a reduction of 83 basis points, The Net NPA reduced from ₹1,334 crore to ₹736 crore during the same time frame.
Banks’ interest income rose 4.5% year-on-year from ₹1,249 crore in Q4FY23 to ₹1,306 crore in Q4FY24. Net profit also increased significantly by 34%, from ₹476 crore to ₹639 crore.
Written by Omkar Chitnis
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