SBI bites NPA bullet, profit plunges 67% to Rs 1,259 cr

The bank had posted a profit-after-tax of Rs 3,828.20 crore in the third quarter of the last financial year

Country's largest lender State Bank of India (SBI) on Thursday reported a massive 67 per cent fall in consolidated net profit at Rs 1,259.49 crore in the quarter to December, joining its peers in cleaning up the book, and classified loans worth Rs 20,692 crore as having turned bad.

SBI also warned of more pains in the March quarter to meet the Reserve Bank of India (RBI) diktat to clean the books by the end of the financial year as the bank has only provided for about half of the accounts that are stressful.

The SBI Group had posted a profit-after-tax of Rs 3,828.20 crore in the third quarter of the last financial year.

On a standalone basis, the bank's net profit dropped a massive 61.67 per cent to Rs 1,115 crore from Rs 2,910 crore due to increase in bad loans and the resultant higher provisioning.

However, in absolute terms the gross non-performing asset rose only 20 basis points to 5.10 per cent from 4.90 per cent, while net NPAs rose just 9 basis points to 2.89 per cent.

But total provisions rose 31 per cent to Rs 8,483 crore from Rs 6,477 crore. Net loan loss provision was up 58.93 per cent to Rs 7,645 crore from Rs 4,810 crore.

"We have been saying that there are a few large accounts where workouts are happening and if they happened then things should be alright and if not, then we need to probably classify them as NPAs. In this quarter many of these have been classified as NPAs," SBI Chairman Arundhati Bhattacharya told reporters here.

Under the asset quality review, the RBI has asked banks to reclassify as many as top 150 accounts as non-performing loans and make provision for them before the end of the March quarter.

Of the Rs 20,692 crore fresh slippages, Rs 5,900 crore are normal slippages and the balance are in from the asset quality review. Of the loans under asset quality review, the bank has classified as NPAs only half of the stressful loans in Q3 and it expects a similar kind of the slippages in the March quarter.

"Those accounts which we have not classified as NPAs in the quarter, many of them are those where resolution or workout plans are in an advanced stage. Should those resolution plan materialise then that number could be less.

"On the other hand there are accounts which have been classified by other banks which may not be with us. Now if we look at those and if those also are required to be classified by us then it could be a little more. But it would be around this number," Bhattacharya said.