Hit by a sharp rise in provisioning for bad loans and significant mark-to-market (MTM) losses due to hardening of bond yields, State Bank of India (SBI), India’s largest bank, on Tuesday posted a record standalone net loss of Rs 7,718 crore in the fourth quarter ended March 2018 against a profit of Rs 2,814 crore in the same period of last year. Gross NPAs, as a percentage of gross loans, jumped to 10.91 per cent from 6.90 per cent as on March-end 2017. Read | SBI chief Rajnish Kumar: 2020 to be year of happiness According to the bank, a lower investment income as well as higher provisioning for wage revision also dented the profits. When compared sequentially, the loss in March quarter widened from Rs 2,416 crore net loss in the December quarter. For the full year, the bank has reported a net loss of Rs 6,547 crore, while there was a net profit of Rs 10,484 crore in 2016-17. SBI shares closed 3.69 per cent up at Rs 254.15 on the BSE. Last week, Punjab National Bank reported a loss of Rs 13,417 crore for the March quarter on account of the fraud allegedly carried out by jewellery designer Nirav Modi and associates. In absolute terms, gross NPAs of SBI soared to Rs 2,23,427 crore as of March 2018 from Rs 1,12,343 crore by the March-end 2017. Net NPAs were Rs 110,855 crore compared with Rs 58,277 crore. Net NPAs rose to 5.73 per cent of the net advances. In the March quarter, the bank’s provisions for non-performing assets (NPAs) jumped by 119 per cent to Rs 24,080 crore as against Rs 10,993 crore in the same period of 2016-17. SBI earlier indicated about Rs 50,000 crore in new bad loans but the actual figure was much less at Rs 33,670 crore, up 30.3 percent on quarter, which has been completely provided for, SBI Chairman Rajnish Kumar said the bank has consciously chosen not to avail the mark-to-market loss dispensation (to spread across four quarters) and taken it all at once as it sees bond yields rising further. SBI has provided for 56 per cent of its exposure to the first 12 companies referred to the National Company Law Tribunal by the Reserve Bank of India last year. However, Kumar said he does not expect the loss to exceed 50-52 per cent of the total exposure. Kumar said the bank’s provision coverage ratio was 5 per cent higher year-on-year at 66.17 percent, and is now among the best in the industry. Other factors that weighed on the lender’s bottom line were a revision in wages and an enhancement of the gratuity ceiling. “We have put the past behind us even as the last three years have been challenging. Today, what you see is a stronger State Bank of India than two years ago,” Kumar said. According to the SBI Chairman, around 57 per cent of SBI’s domestic loan book is now made up of retail loans while corporate loans make up the remaining 43 per cent. He also said that the share of higher-rated corporates was higher than before. The bank also experienced a decline in its operating profit, net interest income during the quarter. However, its non-interest income has improved. SBI said recovery in written-off accounts registered a robust growth of 21.18 per cent in March quarter. Citing RBI’s circular of April 2017, SBI said the banks are required to make provisions at a higher rates in respect of advances to stressed sectors of the economy. Besides, in cases of NCLT accounts the provisioning requirements is reduced from 50 per cent of secured portion to 40 per cent of secured portion as on March 31, 2018.
