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February 2019
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State Bank of India (The
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State Bank of India (SBI) on
Friday said it expects non-performing asset levels to come down in the short
term after it beat expectations with its highest quarterly profit in nearly
seven years.
The strong results highlight a recovery at
the country’s biggest lender by assets, where results have been depressed over
the past year by higher provisioning after the central bank tightened rules to
tackle record levels of bad debt.
SBI, which accounts for more than a fifth of
India’s banking assets, saw its gross bad loans as a percentage of total loans
ease to 8.71 percent at end-December, from 9.95 percent in the previous quarter
and 10.35 percent in the year-ago period.
For an interactive graphic on the bad loans
ratio at some Indian public-sector lenders,In absolute terms, its gross bad loans eased
from the previous quarter to 1.88 trillion rupees, helped by a slowdown in
slippages.
“We are working in the direction of bringing
down the net NPA, and with some luck we should be below 3 percent by the end of
March 2019,” said SBI Chairman Rajnish Kumar.
As of the end of December, net NPA was at
3.95 percent, down from 4.84 percent in the previous quarter.
Net profit came in at 39.55 billion rupees
($556 million) for the third quarter ended Dec. 31, versus a loss of 24.16
billion rupees a year ago, and far ahead of analysts’ expectations for a profit
of 32.08 billion rupees, according to Refinitiv data.
The results were helped by a 21.3 percent
drop in bad loan provisions, a write-back on provisions made for mark-to-market
losses, and higher net interest income on the back of healthy growth in loans.
This is the bank’s biggest quarterly profit
since it reported 40.50 billion rupees in the March quarter of 2012.
Kumar also said the resolution of eight accounts,
which is in the “very advanced stage”, could generate 340 billion rupees.
“If all these 8 cases get resolved and reach
final conclusion within the next two months, then we are looking at a situation
where the gross NPA percentage may come down below 7 and net NPA percentage may
come down below 3 percent.”
SBI shares, which rose 3.1 percent after the
results, reversed course to close 3.2 percent lower as bond yields gained after
the government unveiled its budget. The
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($1 = 71.1200 rupees)
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