India’s largest lender State Bank of India (SBI) reported a loss of Rs.4,875.85 crore for the first quarter of the current fiscal year on account of mounting non-performing assets (NPAs). This is the third consecutive quarterly loss reported by SBI, which has been marred by issues related to NPAs. Owing to the huge increase in bad loans, SBI’s provisions to cover up the loss have also increased significantly.
Net interest income for the first quarter increased 23.8% to Rs.21,798 crore compared to Rs.17,606 crore in the same quarter of last year. Total interests earned during the first quarter increased by 7.1% to Rs.58,813 crore as against Rs.54,905 crore in the same period a year ago. Other income for the first quarter declined by 16.57% to Rs.6,679.5 crore from Rs.8,005.66 crore in the same period of last year.
The financial performance of SBI came as a shock considering the fact that most analysts expected the bank to bounce back to profit in the June quarter. In an ET Now poll, analysts expected SBI to report a profit of Rs.242 crore. Analysts from Bloomberg expected SBI to report a net profit of Rs.237.80 crore. In the first quarter of the previous fiscal year, SBI reported a profit of Rs.2,005.53 crore.
SBI reported its first ever loss in the December quarter of the previous fiscal year when it announced a loss of Rs.2,416.40 crore. In the March quarter, losses mounted significantly higher to Rs.7,718.17 crore.
For the June quarter, SBI’s allocation for provisions and contingencies increased drastically to Rs.19,228.26 crore compared to Rs.8,929.48 crore in the same quarter of last year. For the March quarter, SBI’s provisions for NPAs stood at Rs.28,096 crore.
SBI’s first quarter performance also had an impact on its trading price in both BSE and NSE. In today’s, SBI shares fell more than 3% compared to the previous day’s closing price. SBI closed at Rs.304.45 down 3.79% compared to yesterday’s closing price.
Source: Economic Times