SBI mid-corporate NPAs soar to 11.4%, that for SMEs to 9.1%
15 Feb 2014 5:45 AM IST
Painting a grim picture of an elongated period of stress, State Bank of India (SBI) Chairperson Arundhati Bhattacharya said bulk of the stress on assets came from mid-corporate and SME segment.
‘We need at least a couple of quarters of uptick in GDP for the asset quality to be better. I see more pain coming in,’ she said.
The bank has decided to move the stress assets recovery branches that were reporting in the National Banking Group so as to have better focus and outcomes, she said.
‘With that in mind we have now changed the structure and created four general managers- north, south, east, west, who will be reporting into the stress management group and will actually be owning these stress asset recovery branches in the circles,’ Bhattacharya said.
The bank's gross non-performing assets (NPA) ratio deteriorated to 5.73 per cent as against 5.30 per cent in the year-ago period, while provisions towards loan losses rose to Rs 3,428.59 crore from Rs 2,766 crore a year ago. The core profitability gauge, net interest income, grew 13.10 per cent to Rs 12,640 crore, while non-interest income rose to 4,190 crore from Rs 3,626.74 crore.
Analysts at Kotak Securities said the core earnings growth came below expectations due to reduction in the net interest margin (NIM), which dipped to 3.49 per cent from 3.72 per cent a year ago on a dip in yield on advances. The bank had Rs 11,000 crore in fresh slippages, including Rs 9,500 crore from SMEs and mid-corporates alone and added Rs 6,165 crore into the restructured book during the quarter, while a cleaning up of balance sheet resulted in a write-off of around Rs 5,000 crore, Bhattacharya said.
SBI has a restructuring pipeline of Rs 9,500 crore, all of which may not come in the fourth quarter, Bhattacharya said.
The gross NPA ratio in the mid-corporate segment grew to 11.39 per cent from the preceding quarter's 10.21 per cent, while the same for SMEs stood at 9.09 per cent.
Bhattacharya hinted that the bank will be cautious while lending to these two troubled segments. The bank continued its policy of providing Rs 600 crore per quarter for hike in pensions because of the revision in the life expectancy tables.
The Chairperson said it will definitely take a similar hit in the fourth quarter and then take a call on whether to continue with the practice.
Mark-to-market losses on its investment in government securities led to providing Rs 621 crore for investment depreciation, as against a write-back of Rs 129 crore in the year-ago period.
‘We need at least a couple of quarters of uptick in GDP for the asset quality to be better. I see more pain coming in,’ she said.
The bank has decided to move the stress assets recovery branches that were reporting in the National Banking Group so as to have better focus and outcomes, she said.
‘With that in mind we have now changed the structure and created four general managers- north, south, east, west, who will be reporting into the stress management group and will actually be owning these stress asset recovery branches in the circles,’ Bhattacharya said.
The bank's gross non-performing assets (NPA) ratio deteriorated to 5.73 per cent as against 5.30 per cent in the year-ago period, while provisions towards loan losses rose to Rs 3,428.59 crore from Rs 2,766 crore a year ago. The core profitability gauge, net interest income, grew 13.10 per cent to Rs 12,640 crore, while non-interest income rose to 4,190 crore from Rs 3,626.74 crore.
Analysts at Kotak Securities said the core earnings growth came below expectations due to reduction in the net interest margin (NIM), which dipped to 3.49 per cent from 3.72 per cent a year ago on a dip in yield on advances. The bank had Rs 11,000 crore in fresh slippages, including Rs 9,500 crore from SMEs and mid-corporates alone and added Rs 6,165 crore into the restructured book during the quarter, while a cleaning up of balance sheet resulted in a write-off of around Rs 5,000 crore, Bhattacharya said.
SBI has a restructuring pipeline of Rs 9,500 crore, all of which may not come in the fourth quarter, Bhattacharya said.
The gross NPA ratio in the mid-corporate segment grew to 11.39 per cent from the preceding quarter's 10.21 per cent, while the same for SMEs stood at 9.09 per cent.
Bhattacharya hinted that the bank will be cautious while lending to these two troubled segments. The bank continued its policy of providing Rs 600 crore per quarter for hike in pensions because of the revision in the life expectancy tables.
The Chairperson said it will definitely take a similar hit in the fourth quarter and then take a call on whether to continue with the practice.
Mark-to-market losses on its investment in government securities led to providing Rs 621 crore for investment depreciation, as against a write-back of Rs 129 crore in the year-ago period.
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