SBI Q1 Profit Falls 20%, Bad Loans Situation Worsens

SBI’s gross NPAs surged 85.21% to Rs1.88 trillion at the end of the June quarter from Rs1.01 trillion in the same quarter last year

SBI’s gross NPAs surged 85.21% to Rs1.88 trillion at the end of the June quarter from Rs1.01 trillion in the same quarter last year

The State Bank of India (SBI) on Friday said its standalone net profit went down to Rs 2,005.53 crore during the first quarter of the 2017-18 fiscal.

Profit on the consolidated banks' accounts rose 435 per cent to Rs 2,006 crore, from Rs 374 crore net a year earlier, chairman Arundhati Bhattacharya told reporters.

SBI, which accounts for about a fifth of India's banking sector assets, said for the merged entity, gross bad loans as a percentage of total loans was 9.97 percent at the end of June from 9.11 percent three months earlier and 7.40 percent at the end of June a year ago.

The bank witnessed a larger slippage into bad loans from standard assets from the retail - small and medium enterprises (35 percent), agriculture (40 percent) and housing (14 percent) portfolio. Following the merger, the total customer base of SBI increased to 37 crore with a branch network of around 24,000 and almost 59,000 ATMs across the country. SBI was in fact, expecting a surge in the retail lending with the merger. Hence, the slippages numbers were compounded.

Net interest income fell 3.5 per cent to Rs 17,606 crore on like-to-like basis which was due to lower lending rates.

Additionally, the bank will make provisions worth Rs 8,571 crore towards the 12 accounts admitted to the National Company Law Tribunal (NCLT) over the next three quarters.

Going by the regulatory filing, SBI during the first quarter of the current fiscal, earned a total income of Rs 62,911.08 crore, up from Rs 48,928.60 crore during the same period in the 2016-17 fiscal.

The bank completed the data merger process, merger of administrative offices, reallocated branches to different regions, migrated accounts to the new process, re-mapping and shifting of accounts to different controllers, movement of the staff and rationalisation during the April to June quarter.

Bhattacharya concluded her statement by saying, "We have been saying that the physics of the merger is over and the chemistry has just started.We have worked hard for the past 3 months and obviously it (merger) will have its impact and we will work towards it for the next two quarters".

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