State Bank of India on Friday reported a 24 per cent drop in net profit for fiscal year 2015-16 — its sharpest annual fall in five years. India’s largest bank posted a net profit of ₹9,950.65 crore for the year against the ₹13,101 crore it recorded in the previous fiscal year.
Net profit for the fourth quarter ended March declined 66.23 per cent to ₹1,264 crore. NPA provisioning for the quarter stood at ₹12,139.17 crore (₹4,985.8 crore).
The lower profit was a reflection of higher provisioning and cleansing of the balance sheet. SBI Chairman Arundhati Bhattacharya said that most stressed assets on the books have been recognised in the fourth quarter of 2015-16 and indicated that enhanced provisioning would continue in the first few quarters of the current fiscal year.
The SBI scrip shrugged off the disappointing results and rose 6.42 per cent to close at ₹195.55 on the BSE. The bank’s board recommended a dividend of ₹2.60, or 260 per cent, for 2015-16.
Mammoth provision Total provisions for the year shot up to ₹29,483.75 crore (₹20,223.32 crore), of which provisions for NPAs totalled ₹26,984.14 crore (₹17,908.06 crore). SBI said its gross NPAs went up by 225 basis points to 6.50 per cent in 2015-16 (4.25 per cent in 2014-15). Bhattacharya said that the bank has placed loans worth ₹31,000 crore on the ‘watch list’.
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SBI said that “it recognised the provisioning impact in line with the RBI’s Asset Quality Review as well as in respect of other weak accounts to proactively address possible future requirements”.
In the non-corporate loan book, the situation was relatively better. The gross NPA ratio for agricultural loans declined from 8.90 per cent to 6.93 per cent and remained stable for SME loans at around 7.8 per cent. The net impaired ratio (net NPAs plus net standard restructured assets) increased to 6.40 per cent from 6.18 per cent.
“Over and above the loan loss provisions held on NPAs, we now have ₹3,383 crore as additional provision,” the bank said.
Corporate advances up Large corporate advances rose 16.69 per cent in 2015-16 to ₹3,29,026 crore, while mid-corporate advances increased 6.93 per cent to ₹2,32,626 crore and SME advances grew 4.44 per cent to ₹1,89,536 crore. Bhattacharya said she expected to achieve 13-14 per cent overall loan growth in the current year. SBI’s interest income on advances grew 2.96 per cent to ₹1,15,666 crore. She did not expect much pressure on the net interest margin (NIM) in the current year. However, any rate cut by the RBI may exert pressure on the NIM, she added. Treasury income was up 39 per cent in 2015-16.