Mumbai: Country's largest lender State Bank of India (SBI) Thursday reported a massive 67 percent 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 diktat to clean the books by the end of the fiscal 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 fiscal.
On a standalone basis, the bank's net profit dropped a massive 61.67 percent 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 percent from 4.90 percent, while net NPA rose just 9 basis points to 2.89 percent.
But total provisions rose 31 percent to Rs 8,483 crore from Rs 6,477 crore. Net loan loss provision was up 58.93 percent 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 Reserve Bank 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.
"Most of the pain will be taken to the extent possible
within this year itself. But yes there might be something residual in the coming financial year as well," Bhattacharya said.
The SBI counter shed 3 percent to Rs 154.20 on the BSE whose benchmark Sensex plunged by over 807 points today.
During the December quarter, the bank recovered Rs 659 crore bad loans while it upgraded Rs 378 crore. It also wrote-off of Rs 3,697 crore and sold Rs 395 crore of bad loans to asset reconstruction companies.
The bank also refinanced seven accounts worth Rs 7,743 crore under the 5/25 scheme and has a pipeline of of Rs 4,000 crore more.
There was Rs 221 crore of repatriation of profits from abroad. In the second quarter also, it had Rs 485 crore of repatriation.
Gross advances grew 12.88 percent to Rs 14,28,495 crore from Rs 12,65,483 crore. Deposits rose 10.68 percent to Rs 16,71,416 crore from Rs 15,10,077 crore.
"We grew last quarter at 12.88 percent and frankly speaking, had we gone on in the same manner we would have reached the 14 percent target in FY16. However, there is something that we need to consider now. When you have such huge increases in NPAs, the risk appetite of any organisation goes down and therefore it is very difficult at that time to see any big growth in advances," Bhattacharya said.
"So, if you were looking at good quality accounts in which to grow and specially in a situation where you are seeing this kind of an uptick, therefore 14 percent seems a little difficult but definitely 12-13 percent we'll do," she added.
Speaking about the capital raising plan, she said the bank is looking at raising Rs 6,000 through Tier II bonds in the current quarter. The bank has a plan to raise Rs 15,000 crore equity.
By FY17, it is looking at raising around Rs 1,000 crore by selling non-core assets and Rs 2,500 crore through divesting stake in joint ventures - life and non-life companies.