Bad loans hurt Indian state banks, push SBI to surprise Q3 loss

Bad loans hurt state-run banks push SBI to surprise third-quarter loss

Bad loans hurt state-run banks push SBI to surprise third-quarter loss

India's largest lender State Bank of India on Friday reported a net loss Rs 2,416.37 crore for the December quarter of current fiscal as against a net profit of Rs 2,610 crore in the corresponding period the previous year.

That coupled with lower trading income due to rising bond yields resulted in a net loss of 24.16 billion rupees for the three months ending December 31, compared with a restated net profit of 18.20 billion rupees a year earlier.

Net interest income growth of 40.2 percent year-on-year at Rs 4,394 crore was ahead of CNBC-TV18 poll of Rs 3,745.3 crore, with total loan growth of 14 percent YoY at Rs 3.99 lakh crore whereas deposits declined 2.8 percent to Rs 5.73 lakh crore in Q3. Provisions for bad loans rose about 93 percent to Rs 3,155 crore. The gross NPA ratio crossed double digits at 10.35 per cent from 7.23 per cent a year ago. SBI reported a surprise loss hurt by lower trading income on "hardening" bond yields and higher bad loan provisions.

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A Rs 2,000-crore drop in treasury profits to Rs 1,000 crore also affected the profits for the current quarter.

A bulk Rs 10,000 crore of divergences were from the power sector and Kumar said further pain is in the offing, with the bank's high exposure to the sector. Over Rs 6,000 crore in provisions was due to the divergences. The Rs 20,000 crore infusion will reduce government stake by up to 4 percentage points, he said.

"Domestic credit registered YoY growth of 16.38 percent driven by retail loans growth of 33.37 percent", the bank said, adding net interest margin for global and domestic operations improved by 41 bps & 56 bps, respectively.

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The capital adequacy ratio (CRAR) for the quarter was 11.55 percent as against 12.55 percent in the previous quarter.

The SBI scrip closed 1.68% down at Rs 296.40 a piece on the BSE as against a 1.18% correction in the benchmark.

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