India's largest lender State Bank of India has posted standalone net loss of Rs 2,416.4 crore for quarter ended December 2017 (Q3FY18) - the first quarterly loss in almost 17 years - , hit by a sharp spike in provisions and weakened asset quality. The bank had reported a profit of Rs 1,820 crore in the corresponding quarter a year ago.
"Net loss was due to lower trading income due to hardening of bond yields, higher corporate slippages leading to higher loan loss provisions and significant investment depreciation hit," the bank said in its filing.
Net interest income, the difference between interest earned and interest expended, grew by 5.17 percent to Rs 18,687.52 crore compared to last year, with muted loan growth of 2.52 percent at Rs 19.24 lakh crore YoY.
The bank's retail and agri loan growth (YoY) in Q3 stood at 13.59 percent and 5.88 percent, respectively. Corporate credit growth was lower by 4.22 percent at Rs 9.09 lakh crore (YoY), SBI said.
The bank also reported a muted deposit growth of 1.86 percent at Rs 26.51 lakh crore for the quarter YoY due to base effect on account of demonetisation, with CASA deposits growing 1.18 percent and retail 7.05 percent.
Net interest margin improved by 2 basis points to 2.45 percent for December quarter, but contracted by 26 bps year-on-year.
Asset quality worsened further on sequential basis. Gross non-performing assets (as a percentage of gross advances) were higher at 10.35 percent compared to 9.83 percent in previous quarter and net NPAs at 5.61 percent in December quarter were higher compared to 5.43 percent in September quarter.
In absolute terms, gross NPAs increased by 7 percent sequentially to Rs 1,99,141.34 crore and net NPAs rose by 4.6 percent to Rs 1,02,370.12 crore due to corporate books.
Provisions for bad loans for the quarter ended December 2017 stood at Rs 17,759.72 crore, which shot up 145 percent compared to year-ago and increased 6.2 percent over September quarter.
Fresh slippages at Rs 25,836 crore in Q3 (including corporate slippages of Rs 21,823 crore of which power sector exposure to Rs 14,422 crore) were sharply higher compared to Rs 9,026 crore in September quarter.
"Slippage ratio for 9-month period was lower from year ago level and we aim to contain fresh slippages within 2 percent in FY19," Rajnish Kumar, Chairman, SBI said while addressing press conference.
The bank said 89 percent of corporate slippages in Q3FY18 were from the standard stress pool and slippages worth Rs 10,738 crore were from watchlist (that was Rs 21,288 crore in September quarter). The recovery in corporate watch list was Rs 208 crore, it added.
Watchlist at the end of quarter stood at Rs 10,341 crore (compared to Rs 21,288 crore in September 2017), Kumar said, adding the bank has provided almost 60 percent for National Company Law Tribunal (NCLT) cases.
SBI said it expects major NPA resolutions through FY2019 and steel sector accounts comprising more than 50 percent of NCLT-I cases are receiving encouraging response.
Credit cost at 3.64 percent in December quarter was higher compared to 3.42 percent in September quarter, but lower compared to nine-month period ended December at 3.64 percent (against 2.47 percent in nine-month FY17).
Cleaning of balance sheet is almost looked like complete, with taking provision coverage ratio to 65.92 percent, Rakesh Tarway of Reliance Securities said.
Impact of provisions and treasury loss was on expected lines, he added.
Numbers missed analyst expectations, but considering expected high provisions on addition of subsidiaries and treasury loss, numbers are in line, experts said. A CNBC-TV18 poll estimated profit at Rs 2,507.6 crore and net interest income at Rs 19,088.7 crore for the quarter.
"These are difficult numbers to digest due to subsidiary addition and the divergence for the bank like SBI was in line, so numbers are in line," Sanjiv Bhasin of IIFL.
Gross NPA divergence was at Rs 23,239 crore and net NPA divergence at Rs 17,518 crore March 2017, with provision divergence at Rs 5,721 crore, Rajnish said.
Adjusted profit for financial year 2016-17 stood at Rs 6,743 crore against Rs 10,484 crore reported earlier.
Other income (non-interest income) during the quarter declined 30 percent year-on-year to Rs 8,084.2 crore on lower trading income due to hardening of bond yield.
Operating profit in Q3 fell by 18.4 percent to Rs 11,755 crore compared to year-ago.
The bank has reported tax reversal of Rs 4,705 crore for the quarter against tax expenses of Rs 658 crore in year-ago.