SBI's bad loans are nearly four times that of its private sector counterpart ICICI Bank, which had reported non-performing loans worth Rs 26,000 crore at the end...
of the March quarter.
SBI set aside Rs 12,140 crore as provisions for bad loans in Q4, leading to a sharp fall in its profitability at Rs 1,264 crore as compared to Rs 3,742 crore in the same period one year ago. SBI's profit drop was higher than analysts' expectations.
SBI had posted a net profit of Rs 3,742 crore in January-March 2015. For 2015-16, its net profit was Rs 9,950 crore against a net profit of Rs 13,101 crore in 2014-15
However, SBI's numbers were better than its other PSU banks, most of which have reported huge losses in the March quarter. So far, 13 state-run banks have posted combined losses of around Rs 25,000 crore in Q4 due to a surge in provisions for bad debt after a clean-up ordered by their regulator, Reserve Bank of India.
Arundhati Bhattacharya, chairman and managing director of SBI, assured investors that the entire impact of asset quality review ordered by RBI has been accounted for in the previous two quarters. This means that the worst of asset quality problems may be behind SBI, analysts said. SBI shares closed 6.4 per cent higher at Rs 195.90, outperforming the 1.1 per cent gain in the broader Nifty. Bhattacharya said, “I don’t see any extraordinary pressure on the NIM (Net Interest Margin). However, this is a falling rate scenario and an accommodative cycle. If there is a rate cut, there is a pressure to bring down the interest rate. There could be some impact on the NIM.”