Retail loan recovery nears pre-crisis levels | Economic Times

MUMBAI: The grim shadow of Covid is fading fast — and that’s evident in not just the dashboards on caseloads and fatalities. Bankers and non-bank lenders lately are able to recover the bulk of the retail advances they made, and the crème-de-la-crème of high-street banking reported collection efficiencies north of 95% since the economy began opening up.“Demand resolution for the December-January period was along the guided lines and inched closer to pre-Covid levels for most banks,” said Kunal Shah, analyst, ICICI Securities. “Surprisingly, even in such a non-conducive environment, recoveries have been better than pre-Covid levels.”Top mass lenders across all retailing asset classes — SBI, HDFC, Kotak Mahindra and Axis — reported collections exceeding 95%.The microfinance segment, however, bucked the trend, reporting stagnant-to-declining collection efficiency for most players.At the end of December, SBI reported a collection efficiency of 96.5%, while Axis Bank said its collection efficiency rose to 97%. Kotak Mahindra Bank said collections were back to normal in the secured advances and construction equipment, while it was nearing normalcy in the unsecured segment. Bandhan Bank was the only laggard with 92% efficiency in its MFI book. HDFC’s retail book had a collection of 97%. 80955121‘Large Banks Better Placed’“Asset quality has been much better... led by improved collection efficiency, controlled slippages, and low restructuring,” said Gautam Duggad of Motilal Oswal.“Large banks are better placed with high proforma provision coverage and lower restructuring, while mid-sized banks — such as RBL, DCB, and Bandhan – appear to be marginally more stressed and expect higher provisions in the near term.”Ujjivan Small Finance Bank said its collection efficiency improved to 94%, although it saw a blip of 2% in January due to the Assam stress.Overall, the Street was enthused by the fact that recognition of stress and restructuring settled within the range guided by banks. Overall proforma slippages settled 2-5% higher as compared to last year at the end of December. So far, banks have declared restructuring of nearly 1% of outstanding loans and shown 30-60 basis points higher pro-forma gross-nonperforming loans.“Slippages relatively came in higher for Bandhan, IndusInd, RBL, and Axis, while they remained contained — much below anticipation for HDFC, SBI and Kotak," Shah added. “Banks have highlighted that unsecured retail and CV (bus operator segment) portfolios are reflecting disproportionate stress.”