State Bank of India (SBI) on Friday reported a net profit of Rs 1,264 crore in the March quarter of FY16, down 66 per cent from a year earlier, on the back of higher loan loss provisions. Provisions for bad loans more than doubled on a year-on-year (y-o-y) basis to Rs 12,139 crore in Q416. SBI chairman Arundhati Bhattacharya said the bank had put upfront much of the pain that may have occurred. “I have said conservatively we expect around 70 per cent of the assets on the watch list to turn bad. However, we believe that if the economy does better and if demand comes back, the slippage into non-performing assets could be as low as 30 per cent,” Bhattacharya said. SBI has created a watch-list of accounts worth Rs 31,352 crore and expects 70 per cent of it to slip into non-performing category. The chairman observed that not all the accounts on the watch-list are manufacturing units that are closed down or roads on which nobody is driving. “These are actually accounts which are still functional but stressed because they don’t have enough cash generation,” she said. “We will use all the tools for recovery and lot of efforts is being given internally for it. We have our stressed asset management group (SAMG) and they are working very hard,” Bhattacharya said. Of the total slippages of Rs 25,381 crore in the quarter, close to Rs 20,000 crore originated from the large and mid-corporate segments. The sectors under its watch-list are power (Rs 4,748 crore), iron and steel (Rs 4,299 crore), engineering (Rs 3,574 crore), and oil and gas (Rs 3,396 crore), among others, and belong to the special mention account-2 (SMA-2) category or accounts where repayments are due between 60 and 90 days. The watch-list accounts for 2 per cent of its total loan book. FE
