State Bank of India (SBI), the country’s largest lender, reported a ₹4,876 crore loss for the quarter ended June due to provision for investment depreciation as the bank chose to not avail the regulatory dispensation of spreading mark-to-market losses over four quarters.
SBI, which posted a profit of ₹2,006 crore in the year-earlier period, had reported a ₹7,718 crore loss in the January-March quarter.
The bank made a provision of ₹7,098 crore for investment depreciation while earnings included a write-back of taxes of ₹2,379 crore. Operating profit rose marginally to ₹11,973 crore during the reporting period.
Coverage ratio improves
Fresh slippages were sharply lower in the quarter at ₹9,984 crore, compared with ₹33,670 crore in the preceding quarter and ₹26,249 crore a year earlier.
The bank also improved its provision coverage ratio to 53.38%. It was 50.38% in the quarter ended March and 42.7% a year earlier.
“Fresh slippages are within our guidance… The provision coverage ratio will improve further in the coming quarter,” Rajnish Kumar, chairman, SBI, said in the post-earnings media interaction.
While slippages from corporate borrowers were only ₹3,000 crore, agriculture, small and medium enterprises and retail loans contributed to the maximum slippages.
“Slippages in agriculture came from only two States, Maharashtra and Karnataka,” Mr. Kumar said. While farmers had been reluctant to pay their dues in Karnataka as there was a pre-election promise of a loan waiver (which was eventually kept), in Maharashtra, a waiver was announced a year back, the full payment for which was yet to come.
Non-performing asset ratios improved sequentially with gross NPA ratio slipping to 10.69% compared with 10.91% in the previous quarter, but higher than the 9.97% posted a year earlier.
The bank reported a 23.8% rise in net interest income to ₹21,798 crore, mainly due to resolution of stressed assets referred for bankruptcy proceedings.
As a result, domestic net interest margin for the quarter also swelled to 2.95% from 2.67% a quarter earlier and 2.5% a year earlier. Mr. Kumar said NIM would stabilise at about 2.8%.
Loan growth
While domestic advances grew 7.2%, overseas loan growth shrank 4.4% mainly as a result of the Reserve Bank of India’s decision to ban letters of undertaking for buyers’ credit.
In the U.K., SBI has carved out a subsidiary so that loans extended by the arm do not accrue to SBI’s books.
Mr. Kumar said the bank was looking at 10% loan growth in the current fiscal.
