State Bank of India (SBI), India's largest lender, reported a 61.7% plunge in its net profit to Rs 1,120 crore with fresh slippages during the quarter at Rs 20,692 crore, most of which came from its loans to companies; about 70% of which came out of the RBI review.
The Reserve Bank of India's (RBI) inspection of banks' books continued to hit the profits of public sector banks with some of them reporting huge losses on Thursday.
State Bank of India (SBI), India's largest lender, reported a 61.7% plunge in its net profit to Rs 1,120 crore with fresh slippages during the quarter at Rs 20,692 crore, most of which came from its loans to companies; about 70% of which came out of the RBI review. Almost a similar amount of fresh bad loans are expected to be thrown up in the fourth quarter that will end in March 2015.The total gross non-performing assets of SBI were Rs 72,791 crore, which is 5.10% of its gross advances. SBI's loan book constitutes about 15% of the total bank credit in India.
Arundhati Bhattacharya, chairman, SBI, said in a press conference after the results, "Most of the pain will be taken to the extent possible in the current financial year to March. "But yes, there might be something residual in the coming financial year as well. But we cleaning up the balance-sheet and getting ready to participate in the growth that is expected to come in the economy. All our operating parameters are strong, with credit growth at 12 % expected to go up further in the fourth quarter. The loan growth has come from high quality corporate clients."
SBI stock closed 3% lower at Rs 154.20 a piece on the BSE. During the day the stock had risen 5.2% as the market viewed the performance was better than peers Reliance Securities said in a note, "Assets quality deteriorated during the quarter as the bank partially account the impact of stressed account review conducted by RBI. Provision expenses grew 51.9% over the preceeding quarter and 82.3% over the last year to Rs1,120 crore."
Bank of India, fourth largest government-owned lender, reported a loss of Rs 1,506 crore for the December quarter, the largest loss so far reported by any bank due to a spike in its bad loans. Gross non-performing loans at Bank of India soared to Rs 36,519 crore against Rs 29,894 crore sequentially. As a percentage of total advances its non-performing loans stood at 9.18% against 7.55 per cent in the September quarter.
Bank of India was stock closed 6% at Rs 85.20 a piece on the Bombay Stock exchange Vaibhav Agrawal, VP research- banking, Angel Broking, said in a note, that the gross NPA ratio at 9.18% as against 7.55% quarter on quarter while the net NPA ratio came at 5.25% as against 4.31%. Provisions came in at Rs 3,604 crore as against Rs 1,581 crore during the third quarter 2014-15. Also, more stress is left to come in the next quarter."
Union Bank of India reported 74% decline in the net profit to Rs 78.5 crore for the quarter ended 31 December following provisions for the sharp increase in bad loans and lower net interest income (NII). Net profit a year ago was Rs 302.42 crore. Gross NPAs for the third quarter stood at Rs.18,495 crore, up 19%, as compared with Rs.15,541 crore reported in the second quarter.
Union Bank of India stock was down 3.26% at Rs 118.80 a share.
Emkay Research called Union Bank of India's performance "modest". "Its gross NPAs increased by 19% over the preceeding quarter. Weak net interest income (NII) down 5.9% over the previous year, down 5% over the previous quarter – led by modest growth in business, credit was up 5% over the previous year and deposits were up 4.6%," it said in a note.
Chennai-based Indian Bank reported a 84.75% drop in net profit at Rs 42.30 crore for the third quarter ended December 31, 2015 on higher provisioning for bad loans with fresh slippages of Rs 400 crore during the quarter. Rising bad loans pushed provisioning costs up 94 % to Rs.718 crore. Provisioning costs refer to the funds that banks have to set aside from their profits to meet any loss arising from bad loans. Gross NPAs were up 29 % at Rs 7,071 crore for the quarter ended December versus Rs 5,461 crore in the year-ago period.
Indian Bank's stock was down 5.70% at Rs 80.30 on the BSE.
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