State Bank of India, the country’s largest lender, on Friday posted a 99.6 per cent fall in consolidated net profit at Rs 20.7 crore for the September quarter as against Rs 4,991.70 crore during the year-ago quarter on the back of higher loan loss provisions.
SBI chairman Arundhati Bhattacharya said recoveries are expected to pick up speed because there was more clarity and visibility on the resolutions going forward. “I will definitely say that visibility is much greater regarding the resolutions of many large value accounts,” she said. It reported a 34.57 per cent fall in standalone net profit at Rs 2,538 crore in the September quarter of FY17 as against Rs 3,879 crore in the previous period. Provisions for bad loans almost doubled on a year-on-year (y-o-y) basis to Rs 7,670 crore.
In absolute terms, its gross non-performing assets (NPAs) crossed the Rs 1 lakh crore mark to Rs 105,783 crore, from Rs 56,834 crore at the second quarter in the previous fiscal, nearly 100 per cent increase. Net NPAs increased to Rs 60,013 crore as against Rs 28,592 crore. Provisioning for non-performing assets (NPAs) or bad loans on group basis rose nearly three-fold to Rs 15,326.91 crore during the quarter under review, as against Rs 5,330.96 crore in year-ago period. As of September 30, gross NPAs deteriorated to 7.14 per cent of gross advances, compared with 4.15 per cent year a year ago.
According to Bhattacharya, a number of new players have come up who specialise in operations and management (O&M). “So even where we are not able to get a buyer we can do the conversion of debt to equity and put an O&M player. That will also give us a lot of comfort going ahead,” she explained. The bank reported a healthy rise in other income at Rs 8,424 crore, up 36 per cent from the same period last year. Of this, Rs 4,317 crore was in the form of fee income and Rs 2,291 crore was on account of profit booked on investments.
Of the total slippages of Rs 10,341 crore into bad loan category in the quarter, Rs 4,853 crore originated from the watchlist. “We have said that slippages will be around Rs 40,000 crore and what we are saying is that slippages from the watchlist and the restructured book is still ranging between 75-80 per cent. Therefore around 25 per cent will be outside the watchlist,” she said.
In Q4 of last year, the bank had created a watch-list of accounts worth Rs 31,352 crore and expected 70 per cent of it to slip into non-performing category in a worst-case scenario. It now stands at Rs 25,951 crore following fresh slippages in Q2.
SBI’s net interest income — the difference between interest earned and interest expended — remained flat and grew 1.29 per cent y-o-y to Rs 14,437 crore and its net interest margin — a key measure of profitability — fell 27 basis points (bps). Its capital adequacy ratio (CAR) rose 177 bps y-o-y to 13.94 per cent in Q2. The bank reported loan growth of 8.1 per cent to Rs 14.81 lakh crore and its total deposits grew 13.7 per cent to Rs 18.58 lakh crore in the same period.
“In the second quarter, loan growth has been very-very slow for various reasons. We have also internally taken the decision about not really increasing our exposure to those areas where peripheral business is not there. To that extent we will stick to our original target between 11-12 per cent but at the end of the third quarter we will try to give guidance whether we can come up to that level,” she said, adding that the bank has moved around Rs 26,000 crore loans to its investment book in the April-September period this year.
Shares of SBI fell as much as 3.9 per cent on the BSE in intra-day trade, before ending at Rs 272.9, down 3 per cent.