State Bank of In­dia 3Q profit drops 62pc

The Pak Banker - - FRONT PAGE -

NEW DELHI: State Bank of In­dia, the coun­try's largest len­der by as­sets, posted the slow­est profit growth in four years as pro­vi­sions for bad loans al­most dou­bled from the pre­vi­ous quar­ter. Net in­come fell 62 per­cent to 11.2 bil­lion ru­pees ($164 mil­lion), or 1.43 ru­pees a share, for the three months ended Dec. 31, from 29.1 bil­lion ru­pees, or 3.9 ru­pees, a year ear­lier, the Mum­bai-based len­der said Thurs­day in an ex­change fil­ing. That missed the 33 bil­lion-ru­pee mean of 29 an­a­lyst es­ti­mates com­piled by Bloomberg.

Chair­man Arundhati Bhat­tacharya is try­ing to keep soured debt un­der check af­ter the Re­serve Bank of In­dia asked lenders to rec­og­nize and make pro­vi­sions for stressed as­sets on their books. ICICI Bank Ltd., SBI's largest pri­vate-sec­tor com­peti­tor, last month re­ported the slow­est quar­terly profit growth in six years af­ter bad-loan pro­vi­sions surged three­fold.

"Once all the stressed as­sets are rec­og­nized and pro­vided for, the fo­cus will be back on growth," Ha­tim Broach­wala, a bank­ing an­a­lyst at Nir­mal Bang In­sti­tu­tional Eq­ui­ties Ltd. in Mum­bai, said be­fore the re­sults. "Rec­og­niz­ing and pro­vid­ing for pain in their loan book will bog down profit in the short term."

SBI shares fell 1 per­cent to 157.35 ru­pees at 1:41 p.m. in Mum­bai trad­ing, ex­tend­ing this year's losses to 30 per­cent. The S&P BSE In­dia Bankex In­dex, which tracks 10 lenders, fell 16 per­cent this year. The gross bad-loan ra­tio widened to 5.1 per­cent from 4.15 per­cent in the pre­vi­ous quar­ter. By com­par­i­son, HDFC Bank Ltd., In­dia's most-valu­able len­der by mar­ket cap­i­tal­iza­tion, had a ra­tio of 0.97 per­cent. Pro­vi­sions SBI made for soured debt in the lat­est quar­ter al­most dou­bled to 76.4 bil­lion from the pe­riod ended in Septem­ber.

In De­cem­ber, Re­serve Bank of In­dia Gov­er­nor Raghu­ram Ra­jan set lenders a March 2017 dead­line to clean up their bal­ance sheets. The pro­por­tion of In­dian banks' stressed as­sets, which in­clude re­struc­tured and soured loans, to to­tal ad­vances surged to a 14-year high of 11.3 per­cent as of Sept. 30, data com­piled by RBI show. SBI's cap­i­tal-ad­e­quacy ra­tio stood at 12.45 per­cent, the fil­ings showed, com­pared with a re­quire­ment of at least 9 per­cent un­der Basel III rules.

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