India’s largest lender, State Bank of India (SBI), reported a loss for the third consecutive quarter on Friday. The bank posted a shock net loss of Rs 4,876 crore for the quarter ended June with provisions and contingencies more than doubling from last year. Its net profit for the year-ago period stood at Rs 2,006 crore.
A Reuters poll of analysts had estimated the bank to report a loss of Rs 30.6 crore, while a Motilal Oswal note expected the bank to post a profit of Rs 1,683 crore. Provisions and contingencies more than doubled from last year, going from Rs 8,929 crore to Rs 19,228 crore. However, on a sequential basis, the figure saw a nearly 32% fall from Rs 28,096 crore in the fourth quarter of FY18.
The bank said it did not avail the option extended by the Reserve Bank of India to spread out provisioning for mark-to-market (MTM) losses on investments, adding that it has recognised and provided for the entire loss of Rs 5,893 crore in Q1 of FY19.
Speaking to the media on Friday, SBI chairman Rajnish Kumar said the move to recognise the entire MTM loss on investments was to ensure that the growth in the coming quarters is not impacted.
On the asset quality front, Kumar said the total non-performing loans fell by Rs 10,587 crore with recoveries and upgrades of Rs 14,856 crore, which is greater than the figure for the full year in FY18.
Gross NPA ratio stood at 10.69%, a slight improvement from 10.91% in the previous quarter. Net NPA ratio too improved on a sequential basis, coming in at 5.29% as against 5.73% in the last quarter.
The bank saw fresh slippages of Rs 9,984 crore in the quarter ended June, of which 91% came from its watchlist. SBI said a large portion of the slippages from outside the watchlist came from the agriculture space, with Maharashtra and Karnataka being the major contributors owing to the farm loan waivers announced there. Provision coverage ratio (PCR) as on June 30 was 69.25%, up from 66.17% at the end of March.
For NCLT accounts, Kumar said the bank has fully provided for all the accounts in the first list of NCLT accounts, adding that SBI is expecting a recovery of almost Rs 4,000 crore to come in from one of the accounts by the next quarter.
For accounts in the second NCLT list, Kumar said the PCR was 79%. “In September, we intend to further improve the PCR… From December there will be no looking back… We want to ensure that there is no hangover of past credit costs,” Kumar said.
SBI’s net interest income (NII) jumped nearly 24% to Rs 21,798 crore from Rs 17,606 crore last year. The bank said this was aided by a recovery in two major accounts, excluding which the growth in NII was around 13%. Net interest margin on the domestic front stood at 2.95%. However, excluding the one-time impact of the recovery in two accounts, NIM was at 2.8%.
SBI’s stock closed at Rs 304.45 per share on the BSE on Friday, down nearly 4% from the previous day’s close.