SBI Earn­ings Fall 20.4% in Q1, Bank Ex­pects Re­cov­ery No.s to Im­prove

PROFIT ON CON­SOL­I­DATED BA­SIS UP 435% AT 2,006 CRORE

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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.

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