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SBI net slips 38 per cent on higher provisioning

12 November, 2017, 02:42 | Author: Joan Malone
  • Rajnish Kumar State Bank of India Chairman

The drop came after the bank's bad loans had climbed since SBI merged its five subsidiary banks with itself earlier in the year.

Gross bad loans as a percentage of total loans stood at 9.83% at end-September compared with 9.97% at end-June.

State Bank of India (SBI), India's largest lender, has posted a 37.7 per cent decline in standalone net profit at Rs 1,581.55 crore in the September 2017 quarter as against Rs 2,538.32 crore in the same period of a year ago amid a rise in bad loans.

To set aside enough buffers against the expected bad loans, SBI's provisions increased 87 percent over the previous three months to Rs 18,418 crore in the quarter ended September.

Slippages were under control, as gross non-performing assets (GNPA) declined sequentially from Rs 188,068 crore to Rs 186,115 crore at the end of Q2FY18.

State Bank of India, the nation's biggest lender by assets, reported a second-quarter net profit of Rs1,582 crore ($243.3 million), missing estimates, on higher provisions for bad loans.

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Income from non core business helped the bank making higher profits despite higher provisions and call fall in net interest margin to 2.37 per cent from 2.67 per cent a year back.

The bank is also witnessing good recoveries from retail and small and medium enterprises (SMEs) with its NPAs in retail declining to Rs 53,000 crore, of the total NPAs of Rs 1,86,115 crore.

Instead, the NPAs worsened from a year ago, with gross NPAs at 7.14 per cent and net NPAs at 4.19 per cent as on September 2016.

The Rs. 8,400-crore SBI Life Insurance's IPO was oversubscribed 3.58 times during the offer period from September 20-22. The annualised slippage ratio declined to 1.85 per cent compared to 5.28 per cent during the June quarter.

SBI has revealed exposure to 27 accounts from the second list of RBI-identified companies. Announcing the results, SBI chairman Kumar said that the corporate loan book had shrunk because of deleveraging by corporates and shift in borrowing to bonds.

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