SBI Q4 net down 66 pc on bad loans

Weighed down by bad loans, top lender SBI saw 66.2 per cent plunge in net profit to Rs 1,264 crore as it more than doubled the provision for stressed assets in the fourth quarter of last fiscal ended March 31. SBI’s provision towards bad loans alone was raised to Rs 12,139.17 crore during the last quarter of 2015-16, up from Rs 4,985.83 crore in the year-ago period.

Showing a high level of stress in its loan book, the bank said slippages during the quarter stood at about Rs 30,000 crore, while Chairman Arundhati Bhattacharya said accounts worth Rs 31,000 crore were put on ‘special watch list’.

Net profit of State Bank of India in the fourth quarter of the previous fiscal, 2014-15, was Rs 3,742 crore.

Its total income on standalone basis increased to Rs 53,526.97 crore in the quarter under review, from Rs 48,616.41 crore a year ago.

Bhattacharya said the decline in net profit was due to the impact of asset quality review (AQR) to the extent of Rs 9,000 crore during the period.

She said the levels of stressed assets and NPAs had come down due to AQR impact as well.

“Slippages during the last quarter of last fiscal were to the tune of Rs 30,000 crore, out of which Rs 1,000 crore was due to SME and agriculture, while Rs 29,000 crore was on account of large and mid corporates,” Bhattacharya said at a news conference today.

“SBI has currently recognised much of the stressed accounts. Accounts worth Rs 31,000 crore had been put on special watch list,” she added.

In the last quarter of 2015-16, the bank had used a counter-cyclical provision of Rs 1,100 crore. Another amount of Rs 1,100 crore counter-cyclical provision was still left to be used, she said.

“Another floating provision of Rs 3,300 crore has also been made,” she said.   SBI’s total income increased to Rs 1,91,843.67 crore for the fiscal, from Rs 1,74,972.96 crore in 2014-15.

The bank’s net Non Performing Assets, or bad loans were 3.81 per cent (Rs 55,807.02 crore) of net advances as of March 31, 2016, as against 2.12 per cent (Rs 27,590.58 crore) a year ago.

Accounts belonging to various sectors which had been put under special watch list were power, iron and steel, engineering, oil and gas and construction.

“A conservative estimate is that 70 per cent of these will become slippages,” Bhattacharya said.

With the economy doing better in future, it was expected that the level of stressed assets would come down, she said, adding that all the accounts in the watch list were active.

“Stress has been due to lack of cash generation”, she said.

Account by account, efforts were made to determine the weaknesses and SBI was also working on a resolution activity for which a committee had been formed, Bhattacharya said.

Talking about Net Interest Margin, she said that it 3.27 per cent domestic and 1.29 per cent for overseas operations.

“We will try to protect the NIM and there will be no extraordinary pressure on it although in an era of falling rate regime,” she said.

For the current fiscal, the bank was looking at a growth of 13 per cent to 14 per cent, she said.

She said that bank has a good pipeline for project finance compared to a year back and the business confidence had definitely risen.

On capital adequacy, she said that bank was well capitalised at the moment.