Country’s largest lender, State Bank of India (SBI) today shook the investors by reporting a major loss of Rs 2,416 crore in the October-December 2017 quarter, its first Q3 loss in last 17 years.
The SBI attributed the poor performance to losses in treasury operations at about Rs 2,000 crore due to hardening of bond yields, high provisions of Rs 17,760 crore towards substantial corporate loans slipping into bad loans and a significant hit in investment depreciation of Rs 4,044 crore.
This is first time the SBI has posted a quarterly loss since January-March 1999, when it recorded a loss of ₹115 crore.
The SBI had to classify ₹25,830 crore worth of loans as non-performing this quarter. The Reserve Bank of India conducts an annual inspection of banks’ books and directs banks to make additional provision where the regulator thinks it necessary.
“The net loss has to be viewed with hardening of bond yields, treasury losses, provisions for payments of employees of Rs 700 crore for two months…,” said Chairman Rajnish Kumar in a post-results press conference.
He added that SBI will raise Rs 20,000 crore in the next financial year without government subscription to it and focus on rebalancing the portfolio towards retail and SME (small and medium sector enterprise) growth after a muted corporate book.
A substantial part of loans that slipped into NPAs stood at Rs 25,836 crore, up from Rs 9,026 crore in Q2, of which 90 percent was under the stressed category. The watchlist of such loans or the potential bad loans declined from Rs 21,288 crore as on September 2017 to Rs 10,341 crore at the end of December.
“The current quarter was disappointing,” SBI chairman Rajnish Kumar said in the post earnings media interaction. “But every cloud has a silver lining.”
He said most of the recognition of bad loans had been made and the resolution process was underway. SBI, he said, was hopeful of presenting a better financial performance in the next fiscal year.
On being asked if SBI’s performance narrates the functioning of the economy, Kumar said, “You can’t just economy’s performance for 90 days….Need a longer horizon to judge the state of the economy and a large organization like SBI.”
Asked about the Jan.-March quarter, he said, “I do not want to sound optimistic but I am not pessimistic also. But, in 45 days no miracle can happen.”
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