A sharp jump in provision towards loan loss and investment depreciation took a toll on State Bank of India’s bottomline, which slipped into the red in the third quarter quarter ended December 31, 2017.

India’s largest bank reported a net loss of ₹2,416 crore against a net profit of ₹1,820 crore in the year-ago quarter.

Due to divergence (of ₹23,239 crore) in gross non-performing assets (GNPAs) as reported by the bank as on March-end 2017 and that assessed by the RBI, it had to make an additional provision of ₹5,721 crore in the reporting quarter.

Overall slippages, including this divergence during the quarter amounted to ₹25,836 crore. Of this, corporate slippages, amounting to ₹21,823 crore, came mainly from power, telecom, oil and gas, iron and steel, and roads.

Loan-loss provisions, including towards divergence in GNPAs, shot up 84 per cent to ₹17,760 crore (₹9,662 crore in the year-ago quarter). With bond yields hardening during the quarter, the bank saw a sharp jump in provisions towards investment depreciation to ₹4,044 crore (₹479 crore).

Underscoring that FY18 has been a challenging year for SBI as well as the banking sector, Rajnish Kumar, Chairman, said: “Every cloud has a silver lining...We will be able to contain fresh slippages and credit costs in FY19 within 2 per cent.

“...The slippages have peaked...we are at the end of the stressed assets cycle.”

Kumar observed that the bank’s strategy is to align provisions with expected loan losses.

Net interest income (difference between interest earned and interest expended) was up 5 per cent year-on-year (y-o-y) at ₹18,688 crore (₹17,769 crore in the year-ago period). Non-interest income, including fee income, profit/loss on sale of investments, forex income, and recovery in written-off accounts, was down 30 per cent at ₹8,084 crore (₹11,507 crore).

Net interest income declined to 2.45 per cent (2.71 per cent in the year-ago period).

Total deposits edged up 2 per cent to ₹26,51,240 crore.

Total advances nudged up 2.5 per cent to ₹19,24,578 crore. This growth came on the back of healthy growth in home, auto and SME loans. The bank said corporate credit growth was muted due to its strategy to give more loans to better-rated corporates; restricting growth in stressed sectors; and movement of exposure from loan book to investment book.

SBI has made a provision of 60 per cent towards National Company Law Tribunal (NCLT) accounts. Its total exposure to these accounts is ₹78,310 crore.

As at December-end 2017, GNPAs stood at ₹1,99,141 crore against ₹1,86,115 crore as at September-end 2017.

GNPAs rose to 10.35 per cent of gross advances against 9.83 per cent in the preceding quarter.

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