State Bank of India reports surprise loss of ₹2,416 cr
Gross NPAs as a percentage of loans stood at 10.35% as on Dec 31
MUMBAI: State Bank of India, India’s biggest lender by assets, reported on Friday a net loss of ₹2,416 crore for the fiscal third quarter after setting aside funds to cover rising bad loans and losses on its bond portfolio.
It had reported a net profit of ₹1,582 crore in the September quarter. This was the lender’s first quarter under the chairmanship of Rajnish Kumar, who took over in October.
Bank of India (SBI), India’s biggest lender by assets, on Friday reported a net loss of ₹2,416 crore for the fiscal third quarter after setting aside funds to cover rising bad loans and losses on its bond portfolio.
It had reported a net profit of ₹1,582 crore in the September quarter.
This was the lender’s first quarter under the chairmanship of Rajnish Kumar, who took over in October.
In a post-results teleconference, Kumar said that in addition to provisions related to non-performing assets (NPAs), the bank kept aside ₹3,400 crore as a markto-market provision on account of rising bond yields. It also made a ₹700 crore provision for the next round of employee wage hikes.
The previous wage revision agreement for employees of stateowned banks expired on October 31. In the December quarter, yield on the 10-year benchmark government bond rose by 66 basis points. Banks have to revalue their bond portfolio at the end of every quarter. In case the value of the securities is lower than the market rate, they are mandated to keep aside funds as mark-toKumar market provisioning.
The rise in bad loans was because of a Reserve Bank of India (RBI) review which revealed a divergence in reporting of gross NPAs based on fiscal 2017 results. Such divergence— the difference between RBI’s assessment and that reported by the lender—was around ₹23,239 crore at the end of March 2017.
Of the divergence, loans worth ₹2,835 had already been recognised as NPAs in the June quarter, while ₹4,338 crore was upgraded to standard category later. The remaining amount was tagged as bad loans in the three months ending December. Accordingly, total slippages rose to ₹25,836 crore, compared with ₹9,026 crore in July-September.
said 90% of the slippages had already been recognised as stressed accounts and restructured under various RBI schemes.
Gross NPAs as a percentage of total loans stood at 10.35% as on December 31, up from 9.83% reported in the previous quarter.
In the third quarter, the bank made a loan loss provision of ₹17,760 crore, as compared with ₹9,662 crore a year ago. Provision coverage ratio improved to 65.92% at the end of December, from 58.96% a year ago.
According to the bank’s management, NPA recognition has peaked and is not expected to rise here on.
“Many of the resolutions will happen in the June quarter. I don’t want to sound very optimistic on the fourth quarter (March), and neither very pessimistic,” Kumar said, adding that the bank is working on a strategy to capture growth opportunities.
“Looking forward, 2019 onwards, we have certain estimates and plans to achieve a certain level of return on assets. That is what is on our horizon. Today I am sitting in February, in 45 days no miracle will happen. But we can hope for much better performance in the next (fiscal),” he said.