SBI gains on buzz it may sell non-performing assets to ARCs

State Bank of India rose 2.63% to Rs 1,697.05 at 15:07 IST on BSE on a media report that the bank is planning to sell around Rs 5000 crore of its Rs 67799 crore non-performing assets to asset reconstruction companies.

Meanwhile, the BSE Sensex was up 21.27 points, or 0.10%, to 21,831.07.

On BSE, so far 2.68 lakh shares were traded in the counter, compared with an average volume of 2.92 lakh shares in the past one quarter.

The stock hit a high of Rs 1,709.40 and a low of Rs 1,652.15 so far during the day. The stock hit a 52-week high of Rs 2,469.25 on 20 May 2013. The stock hit a 52-week low of Rs 1,452.90 on 28 August 2013.

The stock had outperformed the market over the past one month till 14 March 2014, rising 12.09% compared with the Sensex's 7.08% rise. The scrip had, however, underperformed the market in past one quarter, sliding 5.16% as against Sensex's 5.28% rise.

The large-cap company has an equity capital of Rs 746.57 crore. Face value per share is Rs 10.

According to the report, State Bank of India (SBI) is all set to bring down its bad assets by offloading about Rs 5000 crore of its total non-performing assets valued at Rs 67799 crore to asset restructuring companies (ARCs) before the end of the current fiscal.

A senior SBI official was quoted by the media as saying that there are 14 ARCs functioning at present, and the bank has invited many of them to pick up its stressed loans of around Rs 5000 crore. SBI will definitely be offloading at least a large portion of this to the highest bidders. The process should be concluded before the end of the month, he added.

ARCs typically pay 5-10% of bad loans being bought in cash and the rest could be security receipts (SRs), the SBI official told the media.

SBI's net profit fell 34.21% to Rs 2234.34 crore on 14.91% increase in total income to Rs 39060.76 crore in Q3 December 2013 over Q3 December 2012.

On a consolidated basis, SBI's net profit fell 38.93% to Rs 2838.62 crore on 15.12% increase in total income to Rs 58,642.16 crore in Q3 December 2013 over Q3 December 2012.

SBI's ratio of net non-performing assets to net advances stood at 3.24% as on 31 December 2013, compared with 2.91% as on 30 September 2013 and 2.59% as on 31 December 2012.

The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 5.73% as on 31 December 2013, compared with 5.64% as on 30 September 2013 and 5.30% as on 31 December 2012.

Provisions and contingencies rose 55.54% to Rs 4149.61 crore in Q3 December 2013 over Q3 December 2012. The provisioning coverage ratio as on 31 December 2013 stood at 58.32%.

The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 11.59% as on 31 December 2013, compared with 11.69% as on 30 September 2013.

In terms of RBI circular dated 23 August 2013 on Investment portfolio of banks -Classification, Valuation and Provisioning, the bank has option of distributing the net depreciation on the Available for Sale (AFS) and Held for Trading (HFT) portfolios on each of the valuation dates in the current financial year i.e. 2013-14 in equal installments. Accordingly, the bank has provided for a net depreciation as of 31 December 2013 to the extent of Rs 1267.92 crore. The un-provided depreciation as on 31 December 2013 is Rs 633.96 crore.

Government of India holds 62.31% stake in SBI (as on 31 December 2013).

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