MUMBAI: State Bank of India (SBI) unloaded two bits of bad news after market hours on Friday: An unexpected first quarterly net loss in at least 17 years and significant divergences in provisioning compared to the Reserve Bank of India’s assessment. The country’s largest bank posted a net loss, which none saw coming, at Rs 2,416.4 crore for the quarter ended December 2017 against a net profit of Rs 1,581.5 crore registered in the same period a year ago.
According to Rajnish Kumar, chairman of SBI, the net loss was due to hardening bond yields that caused severe treasury losses. Besides, corporate slippages leading to higher loan loss provisions and significant investment depreciation hit the bank’s bottom line hard.
Treasury income is one of the largest contributors to revenue for SBI. During the quarter, as bond yields straightened, SBI booked a treasury loss of Rs 3,260 crore, dragging down the overall treasury revenue by 8.7 per cent at Rs 20,091.3 crore compared to Rs 22,000.2 crore in the previous quarter.
Besides, fresh slippages during the quarter stood at Rs 25,830 crore but Kumar maintained that the bank was on course to containing slippages. “The slippage ratio for nine months was lower than last year and we aim to contain fresh slippages within two per cent in FY19,” he said adding that the bank has provided nearly 60 per cent towards cases under resolution via NCLT.
Besides, SBI also reported a significant divergence - a staggering Rs 23,239 crore - compared to RBI’s assessment as of March 2017. These assets were duly classified as NPAs and a provisioning of Rs 5,720.6 crore was made accordingly, Kumar said. Gross and net NPA divergence stood at Rs 23,239 crore and Rs 17,518 crore, respectively, as of March 2017, with provision divergence at Rs 5,721 crore.
The net interest income rose 0.5 per cent to Rs 18,688 crore.
