Saturday 28 May 2016

SBI’s Profit Slumps 66% As Bad Loans Jump To A Whopping Rs 1 Lakh Crore

Mumbai: State Bank of India (SBI), the country’s biggest lender, posted a massive 66 percent fall in its net profit in the March quarter, weighed down by higher provisions for bad loans, which jumped to a staggering Rs 1 lakh crore.


SBI’s bad loans are nearly four times that of its private sector counterpart ICICI Bank, which had reported non-performing loans worth Rs 26,000 crore at the end of the March quarter. SBI set aside Rs 12,140 crore as provisions for bad loans in Q4, leading to a sharp drop in its profitability at Rs 1,264 crore as compared to Rs 3,742 crore in the year-ago period. SBI’s profit drop was higher than analysts’ expectations.
Siddharth Purohit, senior equity analyst at Angel Broking said SBI's bottom line was supported by higher other income, while asset quality further deteriorated. “Gross slippages for the quarter stood at more than Rs 30,000 crore which is higher than what the Street and we were expecting,” he added.
However, SBI’s numbers were better than its other state-run peers, most of which have reported huge losses in the March quarter. So far, 13 state-run banks have posted combined losses of around Rs 25,000 crore in Q4 due to a surge in provisions for bad debt after a clean-up ordered by their regulator, Reserve Bank of India.

Arundhati Bhattacharya, chairman and managing director of SBI, assured investors that the entire impact of asset quality review ordered by RBI has been accounted for in the previous two quarters. This means that the worst of asset quality problems may be behind SBI, analysts said. SBI shares closed 6.4 percent higher at Rs 195.90, outperforming the 1.1 percent gain in the broader Nifty.

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