Private banks step up write-offs despite benign NPA ratios in December quarter

Mumbai: Private lenders continued to lean on write-offs to clean up their balance sheets in the December quarter despite asset quality remaining near multi-year lows. An ET analysis of December-quarter earnings of the five largest private sector banks shows they wrote off loans worth ₹12,121 crore, up more than 22% from ₹9,889 crore in the year-ago period.

The data suggested that while headline non-performing asset (NPA) ratios remain benign, underlying stress has not fully eased. Total slippages in the quarter stood at ₹19,048 crore, marginally higher than ₹18,974 crore a year earlier, with stress persisting, particularly in retail and unsecured portfolios. Slippages also remained broadly range-bound on a sequential basis, indicating that fresh asset quality pressures continue to surface.

"Private banks are proactively using write-offs and provisioning buffers to contain credit costs. However, elevated slippages suggest that asset quality pressures-especially in retail credit-remain an area to watch despite low reported NPA ratios," said Prakash Agarwal, partner at Gefion Capital. "Private banks are more aggressive and prudent because they know that recovery could be difficult in some of these retail segments."

Among individual lenders, HDFC Bank reported slippages of ₹3,520 crore in Q3FY26, largely in line with recent quarters, while provisions moderated to ₹2,840 crore following a one-off spike in Q1FY26. Write-offs remained elevated at ₹3,200 crore, reflecting ongoing post-merger balance sheet clean-up.

ICICI Bank saw slippages rise sequentially to ₹5,356 crore, accompanied by higher provisions of ₹2,556 crore, signalling a more conservative provisioning approach. Write-offs of ₹2,046 crore were broadly stable.

Axis Bank continued to report the highest slippages among peers at ₹6,007 crore, though this was lower than the spike seen earlier in the fiscal year.