NEW DELHI: State Bank of India (SBI) on Friday turned in an unexpected net loss of Rs 4,876 crore for the quarter ended June 2018 as against a net profit of Rs 2,005 crore last year.
Lower trading income and higher mark-to-market (MTM) losses due to hardening of bond yields forced it to report losses for the third consecutive quarter.
The RBI allowed banks to spread MTM losses over four quarters, but SBI decided against the hangover, recognising Rs 5,893 crore loss on investments at one go.
According to SBI Chairman Rajnish Kumar, all provisions have been absorbed in June, but credit costs will remain elevated till December, thanks to additional provisions towards gratuity (Rs 900 crore next quarter) and specific power accounts. But SBI was on track to meet its guided cost of 2 per cent this fiscal, he explained.
Provisions and contingencies rocketed 115.33 per cent to Rs 19,228 crore in June, up from Rs 8,929 crore a year ago. Sequentially, they fell 32 per cent from Rs 28,096 crore. Gross NPAs rose 13 per cent to Rs 2.13 lakh crore from Rs 1.88 lakh crore, while as a percentage of total loans, they stood at 10.69 per cent, marginally lower than last quarter’s 10.91 per cent, but steeper than the previous year’s 9.97 per cent.
Net NPAs stood at 5.29 per cent compared to 5.73 per cent sequentially and 5.97 per cent on an annual basis.
According to Kumar, 91 per cent of the corporate slippages came from within the watchlist, while slippages from agriculture and SMEs contributed nearly 63 per cent of the total watchlist.
Agri-NPAs can continue to be a pain point for the bank, he said, adding that the bank was sitting on surplus provision and expects recoveries worth Rs 4,000 crore from one large account.
The bank intends to further improve its overall provision cover in the three months to September.
Net interest income, or the core income, was up 24 per cent to Rs 21,798 crore as against Rs 17,606 crore last year, while other income was Rs 6,679 crore, down 16.57 per cent from Rs 8,006 crore a year ago.
Meanwhile, Kumar said consolidation of international operations was on track and the bank could close down more offices this fiscal, besides considering converting some domestic branches to banking outlets. He also said the proposal to sell 4 per cent stake in SBI General Insurance was a precursor to an IPO next year.