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State Bank of India reported a net loss of ₹4,876 crore in the first quarter ended June 30, 2018, as provisions, including towards investment depreciation and staff expenses, soared. The bank had posted a net profit of ₹2,006 crore in the year-ago period.
The net loss was, however, lower than the ₹7,718-crore loss in the preceding quarter thanks to a ₹2,379-crore write-back in income-tax.
While the loan-loss provisions were up 7.53 per cent y-o-y to ₹13,038 crore, fresh slippages at the country’s largest lender were down to ₹9,984 crore during the quarter against ₹33,670 crore in the preceding quarter. Corporate slippages (including from the textiles, power, roads & EPC sectors) were at ₹3,704 crore while the balance came from the retail, small and medium enterprise and agriculture sectors.
Gross NPAs declined by ₹10,587 crore during the quarter to ₹2,12,840 crore. As at June-end 2018, GNPAs edged down to 10.69 per cent of gross advances (from 10.91 per cent as at March-end 2018). Net NPAs declined to 5.29 per cent of the net advances (from 5.73 per cent as at March-end 2018).
Chairman Rajnish Kumar said the requirement for provisioning on account of the legacy NPA accounts had been largely taken care of. The bank expects to post a profit in the December and March quarters.
“...All the provisioning, or what I call all the pains, all the blows, we are taking upfront... so that future earnings are protected.
“Some of the power assets (seven of them) we are trying to resolve in this quarter. So, if that happens, the provisioning gets advanced... If we resolve them, then whatever is the gap between the provision held and the estimated recovery, that will need to be provided in the September quarter,” he said.
The net interest income (the difference between the interest earned and paid) was up 24 per cent year-on-year at ₹21,798 crore (₹17,606 crore). The non-interest income was down 16.57 per cent y-o-y at ₹6,679 crore (₹8,006 crore). This was mainly due to a loss of ₹1,264 crore on sale of investments (against ₹1,770 crore profit under the same head) and a lower forex income of ₹427 crore (₹667 crore).
The net interest margin improved to 2.80 per cent in the June 2018 quarter against 2.50 per cent in the preceding quarter.
SBI attributed the loss to lower trading income and significant mark-to-market (MTM) losses due to hardening of bond yields and higher provisioning on account of wage revision and enhancement in the gratuity ceiling.
The bank said it has not availed itself of the benefit of the RBI dispensation on amortisation of MTM loss.
Staff expenses increased by 26 per cent y-o-y to ₹9,708 crore during the quarter mainly on account of provision for wage revision and enhancement in gratuity ceiling. The provision for investment depreciation shot up to ₹7,098 crore (against a write-back of ₹755 crore in the year-ago quarter).
Advances up
Domestic advances registered 7.21 per cent y-o-y growth to ₹17,23,443 crore. Gross advances, including overseas loans, were up 5.49 per cent y-o-y to ₹19,90,172 crore.
“Credit growth is still largely coming from retail. But we have a fairly robust pipeline as far as corporate loan demand is concerned,” said Kumar.
Deposits increased by 5.58 per cent y-o-y to ₹27,47,813 crore.
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