The country's largest bank State Bank of India (SBI) on Friday reported a net loss of Rs 4,875.85 crore for the quarter ended June as its provisions for bad loans rose by more than 70 percent year on year.
This is the third straight quarterly loss posted by the public sector lender.
The lender's bottom line was also weighed down by lesser other income, which fell to Rs 6,679.49 crore, primarily because it chose to recognise and report all its treasury losses in the reporting quarter.The bank attributes the loss towards:
1. Lower trading income and significant MTM (mark-to-market) losses due to hardening of bond yields.
2. Higher provision on account of Wage Revision and enhancement in Gratuity ceiling.
For the quarter under review, SBI received a tax write back of Rs 2,379 crore against tax paid of Rs 939.05 crore in Q1 FY18. This helped reduce the losses.
The state-owned bank had reported a net loss of Rs 7,718 crore for the March quarter. In June quarter last year, SBI had reported a net profit of Rs 2,005.5 crore.
According to the average of estimates of analysts polled by Reuters, the bank was likely to report a loss of Rs 30.6 crore for the quarter under review. Motilal Oswal had in fact projected the bank to post a net profit of Rs 1,683 crore.
Total provisions during the quarter jumped by 115 percent year-on-year to Rs 19,228 crore from Rs 8,929.5 crore in June 2017. Sequentially, it fell 31.5 percent from Rs 28,096 crore in Q4 ending March 2018.
Provisions towards bad loans rose 7.5 percent YOY to Rs 13,038 crore but jumped 46 percent sequentially.
Of the total provisions, SBI has made a provision of Rs 2,655 crore till June 30, 2018 (Rs 1,659 crore in March) towards arrears of wages due for revision w.e,f November 1, 2017.
Towards the insolvency accounts, the lender holds provisions worth Rs 37,235 crores (67.05 percent of total outstanding).
NII and other income
The lender's net interest income for the reporting quarter grew 23.8 percent year on year to Rs 21,729 crore. NII is the difference between interest paid on deposits and interest earned on loans.
Other income or non-interest income fell 16.5 percent on year to Rs 6,679 crore, mainly on account of lower trading income. Excluding treasury income, YoY growth was at 27.39 percent, the bank said.
NPAs or Bad loans
As a percentage of total loans, gross non-performing assets (NPAs) fell to 10.69 percent from 10.91 percent as on March 31. At the end of the June quarter last year, SBI's GNPA ratio stood at 9.97 percent.
Net NPA, as a percentage of total loans, came in lower at 5.29 percent, compared to 5.73 percent at the end of March and 5.97 percent at the end of June last year.
Overall, provision coverage ratio (PCR) as on June 30, 2018 was 69.25 percent.
Slippages and Recoveries
Gross slippages for the quarter fell to Rs 14,349 crore, less than half the slippages SBI reported for the March quarter.
Recovery and upgrades during the quarter stood at Rs 14,856 crore.
Watchlist of potential bad loans stood at about Rs 24,000 crore as on June end. Overall slippages will be at two percent of total loans, the bank said.
Loans and Deposits
The growth in domestic advances was at 7.25 percent to Rs. 17,23 lakh crore. while overall gross advances grew 5.5 percent to Rs 18.87 lakh crore. The suspension of buyers’ credit facility by the RBI had an impact Rs 45000 crore on the advances.
Deposits of the bank increased by 5.58 percent to Rs 27.48 lakh crore as on June 2018 from Rs 26,03 lakh crore crore as on June 2017.
Net Interest Margin (NIM -Domestic) increased by 45 bps YoY to 2.95 percent as on June 2018 from 2.50 percent as on June 2017.
Post-results, shares of SBI fell and moved up quickly both by a percent. However, at 2.50 pm, the stock was trading 4.5 percent weaker at Rs 302 apiece as against 0.41 percent lower trade in BSE Sensex.