INSUBCONTINENT EXCLUSIVE:
MUMBAI: State Bank of India (SBI) shocked investors with a third straight quarter of losses as it provided for bond losses upfront and
forecast another quarter of pain as it awaits the resolution of a troubled asset, sending the stock down 3.8%
But the bank promised to deliver full-year profits as it believes loan demand is set to accelerate in the coming quarters and default rates
loss of ?4,876 crore against a profit of ?2,006 crore a year earlier
Analysts had forecast a net profit of ?238 crore, according to Bloomberg
The markto-market bond losses added up to ?5,900 crore.
Loans grew 7% with retail lending, led by home and car loans, increasing 14%
Operating expenses jumped 20% to ?16,505 crore, fuelled by a surge in staff pensions and goods and services tax (GST) payments
mountain of bad loans as the combination of a slump, policy bungling and wrongdoing have led to defaults
While the IBC has been put in place to speed up loan resolution, progress has been slow
National Company Law Appellate Tribunal (NCLAT) in September and bond yields
NCLT cases are appealed at the NCLAT.
SBI chose to provide for all the Rs 5,893 crore in losses incurred in the treasury portfolio in one
quarter, choosing not to opt for the Reserve Bank of India dispensation that allows banks to amortise these across four quarters of the
analyst at HDFC Securities
mention accounts, where loan repayments are overdue.
Other income, which includes treasury operations and the sale of financial products
such as mutual funds and insurance, fell 17% to Rs 6,679 crore in the June quarter from Rs 8,005 crore a year ago
Other income would have increased 27%, if treasury losses were excluded.
Net interest margin (NIM), or the difference between the yield
One basis point is 0.01 percentage point.
Provisions for bad loans jumped to Rs 13,037 crore, up from Rs 12,125 crore a year earlier but
down from Rs 24,080 crore in March 2018
Gross bad loans increased to 10.69% of total assets, from 9.97% a year earlier
Net bad loans stood at 5.29% of net advances.
While the bank has seen operating costs rise by a fifth mainly due to pension provisions, it
has cut expenses elsewhere
It shut 1,589 branches in the past 12 months and closed 289 currency chests across the country
SBI shed 4,061 jobs in the June quarter as total staff strength fell to 259,980 from 264,041 at the start of April.
