SBI Earnings Fall 20.4% in Q1, Bank Expects Recovery No.s to Improve
PROFIT ON CONSOLIDATED BASIS UP 435% AT 2,006 CRORE
Mumbai: State Bank of India (SBI), which merged five of its associate banks from the fiscal year beginning, said June quarter earnings fell 20% on a non-comparable basis, but rose more than four times if the numbers of merged entities were taken into account.
But its overall financials continued to deteriorate as it grappled with the integration of the disparate entities that it brought into its fold in the biggest ever consolidation exercise in the industry.
While the poor state of corporate loan books is well known, what turned worrisome during the quarter was the sudden surge in the retail lending portfolio of the banks about which SBI is confident of coming back.
Profit on the consolidated banks’ accounts rose 435% to .₹ 2,006 crore, from .₹ 374 crore net a year earlier, chairman Arundhati Bhattacharya told reporters.
“You cannot compare merged entity with the solo because there is an alignment of books that is going on,’’ Bhattacharya told reporters. “This one quarter we have only spent to getting our house in order whether it be data merger, people transfers, reorganisation of the branches, so all of that has happened.”
The merger took a toll on bank’s recovery. It witnessed a sharp rise in slippages of .₹ 26,249 crore leading to high provisions. Of the total slippages, .₹ 8,363 crore came from the corporate book and the remaining .₹ 17,886 crore came in from the retail book.
“Despite the massive clean-up in FY17, elevated slippages are disappointing,’’ said Darpin Shah of HDFC Securities. But the bank admitted to the mess the merger has created and is confident it could bounce back.
“During this first quarter due to the merger exercise the kind of follow up we need to do on the retail side went missing,’’ said Bhattacharya. “We were aware that this was going to happen since we didn’t ha- ve the data for follow-up. That is the reason slippages this quarter rose. This is an area we believe we can pull back.”
Net interest income fell 3.5% to .₹ 17,606 crore on like-to-like basis which was due to lower lending rates. Loan portfolio shrank .₹ 65,000 crore to .₹ 18.5 lakh crore. The advances portfolio also dipped because of a shift of .₹ 40,000 crore to commercial paper.
Provisions for bad loans declined 26% to .₹ 9,869 crore and gross bad loans rose to 9.9% at .₹ 1.88 lakh crore. Bad loans ware at 5.6% of total loans.