INSUBCONTINENT EXCLUSIVE:
Mumbai: State Bank of India (SBI) swung to profit in the March quarter from losses a year earlier thanks to robust growth in retail and
Gross and net NPAs (nonperforming assets) are down and provision coverage is at 79 per cent as, rather than going for higher profits, we
have made extra provisions
the year before.
The state-run lender forecast modest growth in the current fiscal with early investment revival and said that the worst of
the bad loan crisis may be over
The bank is stepping up the creditappraisal process by relying more on sector experts to vet borrowing plans before signing off on new
loans.
SBI posted a net profit of Rs 838 crore in the March quarter against a loss of Rs 7,718 crore in the year earlier
Analysts surveyed by Bloomberg had estimated a net profit of Rs 4,841 crore
Investors cheered, however, sending the stock up by 3 per cent to Rs 308.
Meanwhile, SBI has reduced its benchmark marginal cost of lending
rate (MCLR) by 5 basis points across all tenors.
Worst is over: AnalystsAs a result its one year MCLR has come down from 8.50 per cent to
One basis point is 0.01 percentage point.
State-run banks are turning the corner after more than three years of bad-loan related troubles,
following a cleanup directed by the Reserve Bank of India and slowing economic growth
Institutional reforms such as the Insolvency and Bankruptcy Code had also led to higher provisions which ate into profits.
Analysts said the
strengthening) of the balance sheet this Q4 and, thus, the trend of declining incremental slippages ratio, improving PCR (provision coverage
Sharekhan, a brokerage owned by BNP Paribas
account of the grounded Jet Airways
It contributed Rs 1,220 crore to the fresh slippage of Rs 2,284 crore
The other major contributor was ILFS Transportation Networks Ltd (ITNL), the roads unit of the Infrastructure Leasing Financial Services
cent, most of it driven by state-run enterprises
Retail loans grew 19 per cent with home loans leading the trend with 17 per cent growth
Kumar said he expects retail loan growth to continue to be strong
provision coverage ratio climbing to 79 per cent from 66 per cent a year earlier, giving confidence to investors that the bank is in better
shape.
Credit costs fell to 2.66 per cent from 3.62 per cent a year earlier and gross bad loans fell to 7.53 per cent from 10.91 per cent a
it paid for funds, rose 15 per cent to Rs 22,954 crore with the cost of funding falling to 5.10 per cent in fiscal 2019 from 5.30 per cent a