State Bank of India (SBI), India’s largest lender, reported its highest quarterly loss on Tuesday. The net loss for the quarter ending March 31, 2018, was Rs 7,718 crore, as against a Reuters’ poll estimate of a loss of Rs 1,285 crore. The bank attributed the loss to significant mark-to-market losses sustained due to hardening of bond yields, higher provisioning for non-performing assets (NPA), and provisioning on account of wage revision, and increase in gratuity ceiling.
SBI’s provisions more than doubled, from Rs 11,740 crore a year ago to Rs 23,601 crore. The bank’s gross NPA rose around 99% to Rs 2.23 lakh crore from Rs 1.12 lakh crore in the previous year. Gross NPA ratio too rose, to 10.91% from 6.9% a year ago. Fresh slippages came in at a whopping Rs 33,670 crore, a sharp jump from Rs 9,755 crore the previous year. The bank said over Rs 5,600 crore in slippages came from accounts that were under the now-discontinued restructuring schemes like S4A and SDR.
Shares of the bank, however, rose around 6% after the results were announced, touching a high of Rs 259 before closing at Rs 254.15—3.7% higher than the previous day’s close. The positive commentary from the bank management on NPA resolution and plans to unlock more value from the bank’s subsidiaries could be among the reasons.
“Last year was the year of despair, this year is the year of recovery and hope, next year will be the year of happiness,” said Rajnish Kumar, chairman, SBI at a press conference post the announcement of the results. He went on to say that the process of NPA recognition was completed and that the bank remains well capitalised and poised for growth in a “risk-mitigated” manner.
On the subsidiaries front, Dinesh Khara, MD, risk, IT and subsidiaries said the bank was looking to sell a small quantum of the stake, in the range of 3-4%, in SBI General Insurance this year and targeting an initial public offering for SBI Cards next year. He did not say how much money the bank hoped to raise through these stock sales.
When asked if the bank will take advantage of the restrictive order on lending 11 other banks were issued by the Reserve Bank of India, and increase its market share Kumar said: “We don’t compete with family. We have to support them. SBI’s competition is private banks and NBFCs (non-banking financial companies) and we are ready to take them on.”
At a macro level, Kumar said the bank was positive about India’s GDP growth, but expressed concern on the fiscal deficit on account of rising crude oil prices.