State Bank of India (SBI) – the country’s largest lender – reported a 66 per cent decline in net profit to Rs.1,264 crore for the quarter ended March 31 due to higher provisioning for bad loans.
The bank added non- performing assets of Rs.25,382 crore during the quarter.
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The gross non-performing assets (NPAs) hit a record high of Rs.98,173 crore at the end of March which was 6.5 per cent of the gross advances. Its net NPA rose 169 basis points to 3.81 per cent in FY16. “Much of the stress that happened on the bank books has been recognised. We have about Rs.31,000 crore of loan under special watch,” Arundhati Bhattacharya, Chairman, State Bank of India (SBI) said during a post-earnings interaction with the media in Kolkata where the board typically meets to finalise the fourth quarter earnings.
“We also like to mention that we do have floating provisions to the extent of Rs.3,300 crore which could be used for this special watch list account if they slip. We also have Rs.1,100 crore of counter cyclical buffer that has not yet been taken because Reserve Bank of India (RBI) has not allowed us (so far in 2016) to use it,” Ms. Bhattacharya said.
Provision for bad loans increased by 143 per cent to Rs.12,139 crore during the quarter which prompted the bank to use funds from countercyclical buffer – for which approval was granted by RBI in 2015.
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The bank has seen fresh slippages of Rs.30,313 crore while it wrote off Rs.3,208 crore. The recovery and upgradation was slightly over Rs.1,700 crore. Loan extended to the mid-corporate segment contributed the most to bad loans – which were 17.12 per cent of advances followed by small and medium enterprises and agriculture sector. The bank, however, maintained a healthy provision coverage ratio of 60.69 per cent.
“We have gone through accounts by account to try and determine the weaknesses and recognised all of them proactively as possible,” she said.
Merger issueOn the issue of merger of associate banks with itself, Ms. Bhattacharya said there will no impact on capital or bad loans.
“We have sought permission from Government of India to begin negotiations. We have tried to access what the merged entity will look like.
“There will be no big impact either on capital or NPAs. We are well positioned to take the benefit of the merger,” she said.