The State Bank of India (SBI), the country's largest lender, reported a net loss for a second quarter back-to-back, and this time it is three times worse. In its Q4FY18 results, SBI reported a net loss of Rs 7,718 crore. In comparison, in its December quarter, when it had reported its first quarterly loss in 17 years, the net loss stood at Rs 2,416 crore. And the bank had reported a net profit of over Rs 2,814 crore in Q4FY17. In fact, SBI's latest loss is the highest quarterly loss figure reported by any bank after Punjab National Bank's Rs 13,417 crore loss.
The loss stemmed largely from the huge jump in provisions for non-performing assets (NPAs) under the Reserve Bank of India's revised framework for resolving stressed assets. Total provisions went up 66.55 per cent in the quarter under review to Rs 23,601 crore against Rs 14,171 crore in the previous quarter. The year-on-year (YoY) jump this quarter stood at 13.73 per cent. The bank said in a statement that its overall provision coverage ratio on NCLT accounts is 63 per cent, adding that that "wage revision and enhancement in gratuity ceiling" also pushed up the provisioning requirement.
Lower Trading Income and significant MTM [mark-to-market] losses due to hardening of bond yields" further weighed down the bank's bottomline. Significantly, the bank said that it has not availed the benefit of RBI dispensation with regard to amortization of MTM losses. "Our bank has consciously chosen not to avail the mark-to-market loss dispensation [allowed to be spread across four quarters] and taken it all at once as we see bond yields rising further," Moneycontrol quoted SBI Chairman Rajnish Kumar.
SBI's total income in the March quarter stood at Rs 68,436 crore, down 3.87 per cent compared to the corresponding quarter in the previous year. However, the bank's net interest income (NII), the difference between interest earned and interest paid, stood at Rs 19,974 crore, down 5.18 per cent from Rs 21,065 crore in Q4FY17. Its total non-interest income fared better, going up 2.23 per cent to Rs 12,495 crore in the same period, driven mainly by higher fee income and recovery in written-off accounts.Operating Profit also declined by 8.24 per cent to Rs 15,883 crore in the quarter under review from the year-ago period. CASA Ratio stood at a healthy 45.68 per cent. According to the SBI statement, deposits at the whole bank level registered a growth of 4.68 per cent YoY to Rs 27,06,343 crore as on March 2018 while gross advances registered a growth of 4.91 per cent YoY to Rs 20,48,387 crore in the same period.
Fresh slippages in the quarter under review stood at Rs 33,670 crore, up from Rs 25,836 in the December quarter. But the slippage ratio had improved from 5.78 per cent in FY17 to 4.85 per cent in the last fiscal. The bank said that its expected haircut on the entire first list of stressed assets referred to the NCLT is 52 per cent and it is optimistic that a bulk of the resolutions will go through in the first half of the current fiscal. It added that the second NCLT list is likely to be resolved by the end of this fiscal.
Reacting to the results, SBI's share price jumped up 6 per cent during the day, hitting a high of Rs 259 apiece before coming down to Rs 254.15 currently.