By Devidutta Tripathy
MUMBAI State Bank of India, the nation's biggest lender by assets, said on Friday its second-quarter net profit tumbled 35 percent, matching estimates, as provisions for bad loans jumped.Standalone net profit, not including contributions from subsidiaries or associates, slid to 25.38 billion rupees ($379 million) for the three months to Sept. 30 from 38.79 billion rupees a year earlier, SBI said in a statement. The result for SBI, which accounts for more than a fifth of India's banking sector assets, was broadly in line with the 25.33 billion rupees average of 19 analyst estimates, according to Thomson Reuters data.Provisions for bad loans almost doubled from a year earlier to 76.7 billion rupees in the September quarter. Its gross bad loans as a percentage of total loans rose to 7.14 percent at the end of September from 6.94 percent at the end of June.
India's banks had stressed loans of about $138 billion as of end-June. An asset quality review ordered by the Reserve Bank of India, which regulates the sector, has led to a surge in sour assets this year. The regulator wants the lenders to fully disclose and make provisions for all sour loans by March 2017 as part of a clean-up move.
While bad loans and high capital requirements cloud the banking sector's near-term outlook, their longer-term prospects have been brightened by an ongoing crackdown on undisclosed wealth that analysts say will help channel more savings to banks.Shares in SBI were down 1.6 percent by 0745 GMT in a Mumbai market that fell 1.7 percent. The stock is up about 23 percent so far in 2016, outperforming a 5.5 percent rise in the main market index.
($1 = 66.9979 rupees) (Reporting by Devidutta Tripathy; Additional reporting by Sankalp Phartiyal; Editing by Kenneth Maxwell)
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Published Date: Nov 11, 2016 10:15 pm | Updated Date: Nov 11, 2016 10:15 pm