SBI sees bad loan pressure persisting as profit sinks | Reuters - Firstpost
You are here:

SBI sees bad loan pressure persisting as profit sinks | Reuters

#article   #Entertainment   #markets   #opinion   #United Kingdom   #United States  


MUMBAI State Bank of India (SBI), the nation's top lender by assets, reported its biggest fall in quarterly profit in nearly five years as bad loan provisions jumped after a central bank drive to clean up bad debts in India's banking industry.

The lender, which accounts for almost a quarter of India's banking business, said it expected provisions for bad loans to remain high in the current quarter as well.

The Reserve Bank of India, the banking sector regulator, has asked lenders to treat some troubled accounts as official bad loans and make adequate provisions. The central bank is attempting to clean up India's bank balance sheets by March 2017.

More than two dozen lenders majority-owned by the government dominate India's banking sector with two-thirds of the assets. These lenders together also account for about 85 percent of the sector's troubled assets.

SBI Chairman Arundhati Bhattacharya told a news conference on Thursday the lender has treated "around half" of the troubled loan accounts as bad and would take up the remainder in the current quarter, the bank's fiscal fourth quarter.

That would mean provisions in the fourth quarter would be similar to those in the third quarter, she said.

"Most of the pain ... will be taken to the extent possible within the year," Bhattacharya said of the current financial year to March. "But yes, there might be something residual in the coming financial year as well."

The lender said on Thursday net profit for its fiscal third quarter ended December slid 62 percent to 11.15 billion rupees ($164 million) from 29.1 billion rupees a year earlier. Analysts on average had expected a net profit of 33.08 billion rupees.

SBI's provisions for bad loans almost doubled from a quarter earlier to 76.45 billion rupees.

The bank added about 207 billion rupees of bad loans during the quarter, taking gross bad loans to 5.1 percent of total loans.

Shares in SBI closed about 3 percent down in a Mumbai market that fell 3.3 percent amid a global sell-off. The stock had risen as much as 5.3 percent after the results as some viewed its performance as better than peers.

Earlier on Thursday, state-run Bank of India reported a loss for the December quarter as bad loans surged, whereas quarterly profit at another state-owned lender, Union Bank of India fell 74 percent.

($1 = 67.9925 Indian rupees)

(Additional reporting by Gaurav Dogra and Aditi Shah; Editing by Kenneth Maxwell and Adrian Croft)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Feb 12, 2016 01:00 IST

Comment using Disqus

Show Comments