SBIs fresh bad loans soar, to 72 paise for each Rs lent in Q3

Written by fe Bureau | Mumbai | Updated: Feb 15 2014, 10:56am hrs
State Bank of India (SBI) on Friday reported a disappointing net profit of Rs 2,234.34 crore for the quarter ended December 31, down 34% from a year earlier, on account of one-time hits from provisions for loan losses, pension, mark-to-market (MTM) losses and deferred tax liability (DTL). Deteriorating asset quality slippages jumped to Rs 11,438 crore weighed on the quality of the balance sheet.

The banks operating profit during the three-month period stood at Rs 7,618 crore, down 2.21% year-on-year.

The management indicated the worst was not over and that troubles at the countrys largest lender could persist. I really do believe that we have some pain left. I cannot say that this is at an end, Arundhati Bhattacharya, chairman, SBI, conceded to newspersons at a press conference.

On Friday, the SBI scrip closed at Rs 1,475.10 a piece on the Bomby Stock Exchange, down 1.64% from the previous close.

The bank set aside R600 crore as pension provisions, R750 crore for MTM losses on investment and R234 crore to create DTLs. SBI also set aside provisions worth R3,429 crore for non-performing assets (NPAs) during the quarter, up 24% from a year ago.

Operationally, the bank fared reasonably well with net interest income (NII) for the quarter up 13.1% from the previous year to R12,640 crore. Total income rose 15% y-o-y to R39,061 crore in the October-December period. The domestic net interest margin (NIM) stood at 3.51%, unchanged quarter-on-quarter, with the management expecting margins to expand.

Asset quality worsened as gross NPAs as a ratio to total assets rose 9 basis points sequentially to 5.73%. The net NPA ratio rose 33 bps sequentially to 3.24% as on December 31.

Slippages for the quarter exceed a whopping R11,000 crore, compared with R8,365 crore in the July-September period. Bhattacharya said nearly R9,500 crore had resulted from the small and medium enterprises and mid-corporate segments. There are no large chunky accounts in this, she pointed out.

SBI also reported R5,077 crore worth of write-offs during the quarter.

The chairman noted that Indias largest bank had not cleaned up its books at the right time earlier, which was why the current write-offs appeared large. Cash recoveries during the quarter stood at R1,538 crore, while upgrades worth R1,230 crore took place in the quarter, Bhattacharya said.

SBI restructured R6,165 crore worth of loans during the October-December period. Of this, R3,924 crore were standard restructured assets, while R2,241 crore worth of loans were NPAs. Bhattacharya also said that the bank is staring at a pipeline of R9,500 crore of restructuring which will come over the next few quarters.

The banks total advances rose 17.3% from a year earlier to R11,83,723 crore as on December 31.

Of this, retail loans at Rs 2,30,827 crore is the largest portfolio, up 15.5% from the previous year. Deposits during the quarter rose 16.7% y-o-y to Rs 13,49,940 crore. The growth in deposits was driven by a 21.3% rise in retail term deposits, which stood at Rs 5,59,847 crore. Bulk deposits formed only 1.84% of the banks domestic deposits as on December 31.