State Bank loss shocks all

The State Bank of India (SBI) on Friday reported a surprise loss for the third quarter ended December 31, 2017, on account of a spike in provisions for bad loans and rising bond yields that affected its trading income during the period.

By Our Special Correspondent in Mumbai
  • Published 10.02.18
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Mumbai: The State Bank of India (SBI) on Friday reported a surprise loss for the third quarter ended December 31, 2017, on account of a spike in provisions for bad loans and rising bond yields that affected its trading income during the period.

The country's largest lender reported a standalone net loss of Rs 2,416 crore compared with a net profit of Rs 2,610 crore in the corresponding period last year.

Analysts were expecting the bank to post net profits of a little over Rs 2,000 crore.

The SBI added that a Rs 700-crore provision for payment to employees (ahead of a wage revision) also contributed to the losses.

Domestic banks, who have seen higher levels of bad loans over the past several quarters, have to make provisions against such dud assets.

Bad loan spike

During the period, the SBI saw its gross non-performing assets (NPAs) rising to Rs 1,99,141 crore as on December 31, 2017, from Rs 1,86,115 crore as on September 30, 2017.

Slippages, or fresh NPAs, also spiked to Rs 25,836 crore from Rs 9,026 crore in the preceding quarter.

The percentage of gross NPAs also rose to 10.35 per cent from 9.83 per cent on a sequential basis and 7.23 per cent in the year-ago period.

Further, there was also divergence with the RBI on NPA computation for 2016-17. While the divergence in gross NPAs stood at Rs 23,239.13 crore, the same for provisions stood at almost Rs 5,721 crore.

The total loan loss provision at the bank stood at Rs 17,760 crore for the December quarter against Rs 9,662 crore in the year-ago period.

If the bank's bottomline was hit by higher provisions, the SBI also faced the adverse impact of rising bond yields. Its revenue from treasury operations consequently fell to Rs 20,091.28 crore from Rs 22,000.16 crore in the preceding quarter.

SBI chairman Rajnish Kumar, while admitting that the current year had been challenging for the bank and industry, said the bank was looking to contain its slippages to below 2 per cent in the next fiscal.

He further pointed out that the total exposure of the SBI to the accounts identified for resolution under the bankruptcy code (including the two RBI lists) stood at Rs 78,310 crore.

Kumar said the resolution for most of the accounts in the first list should happen in the first quarter of the next fiscal.

The third quarter saw the SBI's core, or net interest income, rising around 5.17 per cent to Rs 18,688 crore from Rs 17,769 crore in the same period last year.

Gross advances grew 2.52 per cent from last year to Rs 19,24,578 crore. Here, retail advances increased 13.59 per cent year-on-year to Rs 5,21,026 crore, of which home loans grew almost 14 per cent to Rs 3,01,087 crore.

Rate call

The asset liability committee of the SBI will meet by the end of this month to take a call on interest rates, Kumar said. The meeting comes at a time there are concerns that banks could hike their lending rates.