NEW DELHI/BENGALURU: State Bank of India is confident of returning to profitability from the December quarter onwards as the impact of eases, its chairman said after the nation’s top lender by assets plunged to its third straight quarter of losses.
India’s banks have been plagued by a surge in non-performing loans which hit a record $150 billion at the end of March. Twenty-one lenders led by SBI, in which the Indian government owns a majority stake, accounted for 86 percent of the pile.
SBI’s gross non-performing loans eased quarter on quarter to Rs 2.13 lakh crore by the end of June, while provisions for bad loans also fell sharply.
But lower trading income and treasury losses meant the lender, which accounts for about a fifth of India’s banking assets, reported a Rs 4,876 crore net loss for its fiscal first quarter ending June.
That compared with a record loss of Rs7.718 crore in the previous quarter, and a net profit of Rs 2,006 crore a year earlier.
On a conference call with journalists after the results, the bank’s chairman said he expected additions of bad loans to be more controlled going forward, and loan recoveries to gather pace as default cases are resolved at the bankruptcy court.
Responding to a question on when the bank would be able to report a net profit, he said: “If you ask me 100 per cent, then take it from December onwards.”
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Kumar said the outcome of a case at the bankruptcy appellate tribunal will think through whether the current quarter will yield a profit, but was confident of posting a profit for the three months to March 2019 and the full year ending March.
In the last quarter, SBI accounted for net mark to market losses on investments of Rs 5,893 crore due to spike in bond yields, despite an option given by the central bank to spread the losses over four quarters.
Its gross bad loans as a percentage of total loans fell to 10.69 perccent at the end of June from 10.91 perccent in the previous quarter, though that was above 9.97 per cent a year earlier.
Provisions for bad loans rose 7.5 per cent from a year earlier to Rs 13,038 crore, but were more than 45 per cent lower compared with the March quarter.
Asutosh Mishra, a banking sector broker at Mumbai’s Reliance Securities, said SBI’s provisions could stay at a relatively elevated level in the current quarter, but expected it to put asset quality woes behind it and focus on loan book growth in the second half of the fiscal year.
“One more quarter of pain is remaining,” he said.
SBI shares closed 4.1 per cent lower, after briefly rising as much as 2.8 percent to their highest in six months following the results.
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