MUMBAI: State Bank of India (SBI) swung to a profit from a year-ago loss but fell short of expectations, prompting chairman Rajnish Kumar to invoke divine intervention.“Every morning I am looking at the sky and praying to God that the three large NCLT accounts stuck in the middle of resolution get resolved — these alone will give us more than Rs 16,000 crore writeback,” Kumar said, referring to Essar Steel, Bhushan Power and Steel and Alok Industries, where SBI has made 100% provisions against bad loans. The National Company Law Tribunal (NCLT) decides on cases under the Insolvency and Bankruptcy Code.Net profit for the June quarter at the state-owned lender was Rs 2,312 crore compared with a loss of Rs 4,876 crore in the year earlier. Profit fell short of the Rs 4,106 crore expectation due to widening losses in the corporate loan book while the treasury and retail segments performed well.Debt WaiversThe increase in fresh slippages to the most in more than a year spooked investors as it suggested that asset quality pressures persist. The stock fell 2.8% to close at Rs 308.45 on Friday on the BSE. Kumar expressed the hope that recoveries, especially from companies undergoing bankruptcy proceedings, will increase.Total provisions fell 35%, margins expanded and a rise in other income made up for tepid net interest income growth. Fresh slippages increased to Rs 16,212 crore from Rs 9,984 crore a year earlier and were at the highest since Rs 29,037 crore reported in the quarter ended March 2018.“While we were not ruling out volatility in corporate slippages… higher slippages across segments (including retail) remain a concern,” said Mona Khetan, analyst at Reliance Securities.Besides corporate loans, slippages also rose in agricultural accounts, mainly due to loan waivers in Maharashtra, as well as in the accounts of some small and medium enterprises (SMEs).“Debt waiver issues emanating from just one state contributed around Rs 2,000 crore to the slippages,” Kumar said.Indian banks, especially private sector lenders, are on the mend with many reporting profit and lower provisions for bad loans in the first quarter of this fiscal. State-run lenders in general are still struggling. SBI had been an exception, showing signs of strength. “Our focus remains on improving operating profit and how to keep fresh slippages under control,” Kumar said. “If we maintain the pre-provision operating profit momentum and maintain a 12% growth and all goes well, then the picture looks alright. But making tall claims is not in the nature of SBI.”While overall loans grew 12.47% to Rs 22.38 lakh crore, state-run corporations dominated, accounting for nearly 100% growth in sectors such as power, roads and ports.The services sector loan growth by Rs 1.05 lakh crore was dominated by state and large private institutions in the non banking finance company (NBFC) sector — they accounted for all the disbursals while for others it shrank.Kumar cited two large accounts that were still classified as standard for which Rs 2,300 crore had to be set aside as provisions, pending restructuring, without giving more details.A large company classified as a Maharatna by the government was also marked as a nonperforming asset (NPA) due to some technical issues, he said.“One regular account of a Maharatna company, which slipped into NPA books of another bank, further impacted the gross slippages,” he said. “One bank did not successfully implement the resolution plan fully on time. This account added about Rs 2,000 crore to the slippages, but the situation can be corrected.”Kumar expressed confidence that stress in the retail segment will not hit the bank much because SBI’s personal loans are mostly to government employees who have greater job security than others.
from Economic Times https://ift.tt/2Mz0k8N
No comments:
Post a Comment