The merger of five associate banks with State Bank of India (SBI) has brought in about Rs 70,000 crore of bad loans into its balance-sheet, pushing its total gross non-performing assets (NPAs) to Rs 188,069 crore at the end of the first quarter ended June 30, 2017.
The massive merger process also gave a little time to the bank on follow-ups and recoveries.
A senior SBI official told DNA Money, "The merger also added to the gross NPA numbers, especially in loans to the small and medium enterprises retail and the agriculture loans. Stress is evident in the large, mid-corporate and agriculture portfolios. Now that the merger process is complete we have detailed plans to monitor every account."
"Among the large corporates, SBI recognised a large electronics account with an exposure Rs 4,830 crore as a non-performing asset (NPA) during the quarter. Of the Rs 17,880 crore of fresh slippages during the quarter, about 40% of came from the agriculture portfolio, 35% from the small and medium enterprises. Home loans accounted for 14% fresh slippages," said Darpin Shah, senior analyst with HDFC Securities.
The slippages during the quarter were at Rs 30,100 crore, including fresh slippage of Rs 26,200 crore. About 95% of the corporate slippages were from the watch-list. The major chunk of the watch-list was loans to the power sector which is about Rs 10,531 crore, while iron and steel sector accounted for Rs 2,939 crore and telecom Rs 2,548 crore.
After the RBI asset quality review, banks have started setting up watch-list where they flag off stressed accounts well in advance so that there are no ugly surprises, and it helps the bank monitor the accounts.
Top 50 accounts contributed 48% to the NPAs of the bank. The watch-list fell to Rs 24,400 crore at the end of the quarter. With growth yet to pick up in the economy, the balance-sheets of companies continued to be in the red with the corporate slippages for the bank at Rs 8,360 crore. SBI had about Rs 50,247 crore in the 12 big loans that have gone to the National Company Law Tribunal. The total provision by the bank for these is Rs 19,943 crore and, based on RBI guidelines, the incremental provision required on these accounts in this fiscal is Rs 8,571 crore. If RBI guidelines had not come in the ageing-related provision, these accounts would have been at Rs 5,034 crore for this fiscal.
BALANCE-SHEET BLUES
- Total gross non-performing assets hit Rs 188,069 crore at the end of Q1
- Stress is evident in large, mid-corporate, and other portfolios
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The slippages during the quarter were at Rs 30,100 crore, including fresh slippage of Rs 26,200 crore. About 95% of the corporate slippages were from the watch-list. The major chunk of the watch-list was loans to the power sector which is about Rs 10,531 crore, while iron and steel sector accounted for Rs 2,939 crore and telecom Rs 2,548 crore.
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