The country’s largest bank State Bank of India on Tuesday reported a net loss of Rs 7,718 crore for the March quarter, primarily due to a surge in provisions.
This was the highest quarterly loss figure reported by any bank after Punjab National Bank’s Rs 13,417 crore loss reported for the March quarter last week.
A Reuters’ poll had estimated the bank to report a loss of Rs 1,270.5 crore, as against a net profit of Rs 2,814.82 crore reported in the same quarter last year.
Provisions surged to Rs 28,096 crore during the reporting quarter, more than twice the amount reported in the corresponding quarter last year.
The rise in provisions was mainly because the bank had to provide more for bad loans, the losses it incurred on trading, and for mark-to-market losses due to a rise in bond yields.
“Our bank has consciously chosen not to avail the mark-to-market loss dispensation (to spread across four quarters) and taken it all at once as we see bond yields rising further,” the bank’s Chairman Rajnish Kumar said.
The chairman added that the bank’s provision coverage ratio was 5 percent higher year on year at 66.17 percent, and is now among the best in the industry.
Other factors that weighed on the lender’s bottom line were a revision in wages and an enhancement of the gratuity ceiling.
“We have put the past behind us even as the last three years have been challenging. Today, what you see is a stronger State Bank of India than two years ago,” Kumar said.
SBI’s gross non-performing assets, as a share of its loans, grew 56 basis points sequentially to 10.91 percent at the end of March. This was over 400 basis points higher than at the end of March last year.
Net NPAs as a percentage of the bank’s loan book came in at 5.73 percent, 12 basis points higher than at the end of the December quarter, and just over 200 basis points higher than at the end of March last year.
NII, NIM and other income
SBI’s net interest income (NII), the difference between interest earned and interest paid, grew 10.53 percent year on year to Rs 19,974.28 crore. The Reuters poll had estimated NII to come in at Rs 19,286 crore.
The bank’s domestic net interest margin declined 26 basis points year on year to 2.67 percent. However, it was marginally higher than the 2.61 percent reported for the December quarter.
The lender’s non-interest income improved 2.23 percent to Rs 12,222 crore, backed by a 13 percent rise in fee income.
At 14:41 IST, SBI shares were trading 3.5 percent higher at 253.65 apiece, while the benchmark Sensex was trading nearly flat at 34,634.32.