SBI reports loss of Rs 7,718 cr in Q4 on higher provisioning

The country's largest lender State Bank of India on Tuesday reported a standalone net loss at Rs 7,718 crore in the March quarter, due to higher provisions for bad loans and gratuity, and lower trading income.

The lender, which last year merged six banks into it, had reported a net loss of Rs 3,442 crore in the same quarter last year. However, excluding the results of the six banks, the bank had reported a net profit Rs 2,814.2 crore in the March 2017 quarter.

This is the second consecutive quarterly loss for the bank, which had reported a loss of Rs 2,416 crore in the December quarter.

For financial year 2017-18, the bank reported a net loss of Rs 6,547 crore, compared with a net loss of Rs 1,805 crore in the previous year.

"Last year, we completed merger of six banks into SBI and this was the first year after merger. So, in a way, the performance was not of the SBI alone, but of the seven banks," the bank's chairman, Rajnish Kumar, told reporters here on Tuesday.

The bank merged five of its associates - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore, and Bharatiya Mahila Bank - into it last year.

Kumar said the performance during the March quarter was impacted by the higher loan loss provisioning and a Rs 6,000-crore mark-to-market (MTM) losses in last two quarters.

The loan loss provisions in the quarter surged to Rs 24,080 crore, from Rs 19,323 crore in the year-ago period.

Bank has not availed the benefit of RBI dispensation with regard to amortisation of MTM losses.

He said the bank had to provide Rs 900 crore in the March quarter due to amendment in the gratuity Act. The government in March this year had doubled the limit of tax-free gratuity to Rs 20 lakh in private sector.

Net interest margin for the bank declined to 2.67 per cent from 2.93%.

Its gross non-performing asset (NPA) worsened to 10.91%, from 9.11%, while net NPA stood at 5.73%, against 5.19%.

Fresh slippages in the quarter stood at Rs 33,670 crore. About Rs 5,662 crore worth of accounts which were under SDR and S4A slipped into the NPA category following RBI's February 12 circular, where they removed all the restructuring schemes.

"As far as the recognition of NPA is concerned, it has been completed. We are fully compliant with the framework issued by the RBI on February 12, 2018," Kumar said.

He said bulk of the insolvency resolutions in the first list in the National Company Law Tribunal (NCLT) will go through in first half of FY19, and the expected haircut on the entire list is 52%.

The second NCLT list is likely to be resolved by the end of FY19, he added.

For FY19, the bank has a watchlist of Rs 25,802 crore.

The bank's deposits grew 4.68% to Rs 27,06,343 crore as on March 31, 2018, while advances rose by 4.91% to Rs 20,48,387 crore.

In the current fiscal year, the bank is targeting a credit growth of 10% and a deposit growth of 9%.

Nearly 57% of the bank's advances consists of retail loans and 43% is corporate. Kumar said the bank is hopeful of a healthy growth in the corporate loan book segment.

"Wherever our expectations of risk-reward metrics is met, we will pursue all those opportunities in a big way and we are all set to come to the growth as far as the corporate credit is concerned," he said.

For FY20, the bank is looking at a credit growth of over 12%, NIM at more than 3% and gross NPA ratio at less than 6%.

"If the last year was the year of disappointment, this year is the year of hope, and FY20 will be the year of happiness," Kumar said.

Kumar said the bank has revamped the training processes for its employees.

"The focus is on developing the leadership pipeline, improving and enhancing the skills, technology and innovation in the bank," he said.

The bank's managing director, B Sriram, said the lender is also rationalising international offices and increasing presence in neighbouring countries such as Nepal.

Its scrip ended at Rs 254.15, up 3.69% on the BSE on Tuesday, against 0.10% increase in the benchmark.