Forbes India 15th Anniversary Special

SBI's Q2 standalone net profit falls 35 percent on higher bad-loans provisions

Bank's stock dips as Gross NPAs surge 86 percent year-on-year

Salil Panchal
Published: Nov 11, 2016 01:11:31 PM IST
Updated: Nov 11, 2016 03:12:54 PM IST

SBI's Q2 standalone net profit falls 35 percent on higher bad-loans provisionsImage: Danish Siddiqui / Reuters

State Bank of India (SBI), the country’s largest lender by assets, reported on Friday a 34.6 percent year-on-year decline in its standalone net profit for the three months ended September 30, 2016, as provisioning for bad loans doubled. Gross non-performing assets (NPAs) for the bank surged 86 percent year-on-year in the quarter.

SBI’s net profit fell to Rs 2,538 crore for the second quarter of FY2017, from Rs 3,879 crore in the corresponding three months of the previous fiscal.

The bank revealed that provisioning for bad loans rose to Rs 7,669.66 crore in the period, from Rs 3,841 crore a year ago. Provisions for the previous quarter, ended June 30, 2016, were at Rs 6,340 crore.

The bank’s shares slid over four percent to Rs 271 on BSE just after the earnings were announced, as the rise in bad loans was higher than expected.  The stock was trading at Rs 272 in afternoon trade.

As of September 2016, SBI’s gross NPAs rose by 4.18 percent to Rs 1,05,782 crore from Rs 1,01,541 crore in the June-ended quarter.  Gross NPAs have surged over 86 percent from the year-ago level of Rs 56,834.28 crore.

The gross NPA ratio—or the percentage of NPAs in total loans—rose to 7.14 percent in the September quarter from 6.94 percent a quarter earlier while the net NPA ratio rose to 4.19 percent from 4.05 percent earlier.

Several public sector banks have been struggling to cope with rising bad loans and higher provisions to cover for a risk of defaults.
 

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