DBS India posts Rs 275-cr loss in FY15 on provisioning

Singapore-based DBS Bank has posted a loss of Rs 275 crore in FY15. This is the first time the bank has incurred a loss in its India business since it set up its first branch in India in 1995.

This loss on the book was mainly on account of a clean-up of its bad loans portfolio. In FY14, DBS’s net non-performing assets (NPAs) had risen to 10.19 per cent at the end of March 2014. At the end of FY15, the bank’s net NPA declined to 4.15 per cent. In absolute terms net NPAs were at Rs 658 crore at the end of March 2015 compared with Rs 1,544 crore in the same period last year. In the same period, the gross NPA was at 7.79 per cent compared with 13.45 per cent in March 2014.

The bad loans were trimmed by exiting certain accounts and by selling select loans. By the end of March 2015, the bank sold loans of Rs 110 crore against a receivable of Rs 400 crore. At the same time, the bank wrote off loans worth Rs 667 crore. With this, the bank has reduced its exposure to the infrastructure and construction sectors.

At the same time, the bank also increased its provisioning to Rs 704 crore from Rs 534 crore, thus affecting profit. “We have provided for and run-down a substantial part of the stressed portfolio which was essentially in the construction and infrastructure linked sectors which have experienced significant slowdown over the last three years… Even though 2014-15 fiscal year profitability is impacted by the balance sheet clean up, the strengthened balance sheet ensures that DBS India is well-placed to further improve the performance as the economy gradually picks up over the next three-six quarters,” said Surojit Shome, chief executive officer-India, DBS Bank.

He added that in the last year, the bank also reduced their investment book which was focused on certificates of deposit (CDs), to ensure that there were more liquid investments in the book. Even the other income declined slightly to Rs 226.68 crore from Rs 255 crore in March 2014.

However, the bank said its overall loan book increased by 4.55 per cent to Rs 15,485 crore even after the sale/write-off of non-performing loans.

In FY15, DBS, the parent bank, had infused capital of Rs 1,625 crore. Till now, the parent has infused Rs 4,811 crore in the Indian subsidiary. Even in this financial year, the parent is looking at infusing tier-II capital. However, the bank has not firmed up the amount yet.

At the end of FY15, the capital adequacy ratio of the bank stood at 17.01 per cent. On April 30, the bank had applied to the Reserve Bank of India to convert its branches into a wholly-owned subsidiary (WOS). The bank said currently it was awaiting information from the regulator.