SBI posts Rs 4,876 cr loss in Q1

​Mumbai: The nation's largest lender State Bank on Friday reported a net loss of Rs 4,876 crore for the June quarter due to higher provisions on account of wage revisions, treasury losses along with enhanced gratuity ceilings, even as the bank reported improvement in overall asset quality. 

The bank that controls over two-fifths of the system had reported a net profit of Rs 2,006 crore in the same quarter last year and the management, however, exuded confidence to return to profit in the December quarter. The bank attributed the hefty loss to lower trading income and significant mark-to-market losses due to hardening of bond yields, and also not availing of the benefit of the RBI dispensation with regard to amortisation of MTM loss. 

Staff expenses rose 25.68 per cent during the quarter mainly on account of provision for wage revisions and enhancement in gratuity ceiling, excluding which the increase is only 1.1 per cent. Gross NPAs stood at 10.69 per cent as against 9.97 per cent, while net NPA declined to 5.29 per cent from 5.97 per cent. Still, the bank made loan loss provision of Rs 13,038 crore, up from Rs 12,125 crore last year. 

"From the December quarter onwards, we expect to turn black. All the factors that could impact the earnings going forward have been taken care of in the June quarter itself. "In the September quarter we intend to further improve the provision coverage ratio on the asset side so that from there onwards there will not be any looking back and there will be no hangover of the past credit cost," chairman Rajnish Kumar told reporters in a post-earnings con-call. 

He also said the bank did not avail of the option given by the Reserve Bank to spread mark-to-market losses to the next quarters but has recognised the entire loss on investments which came in at Rs 5,893 crore. "We have not used the RBI dispensation to stagger our treasury losses. We have been very aggressive as far as provisioning on loans is concerned. Our loan loss cover has gone up by 300 basis points," Kumar said.  

Loan loss provision increased to Rs 13,038 crore from Rs 12,125 crore last year, he added. Reacting to the numbers, SBI shares dived over 6 per cent during the trade and closed with a loss of 3.8 per cent at Rs 304.45 apiece on the BSE, whose benchmark Sensex shed 0.41 per cent after a massive rally to add 1,000 points in the past 10 days of trading. 

Interest expenses on deposits were down by 2.09 per cent from Rs 34,990 crore to Rs 34,258 crore despite a growth in deposits of 5.58 per cent. But non-interest income slumped 16.57 per cent from Rs 8,006 crore to Rs 6,679 crore mainly on account of lower trading income. 

Excluding treasury income, non-interest income rose 27.39 per cent, boosting fee income from Rs 4,870 crore to Rs 4,976 crore, up 2.19 per cent. The bank made Rs 902.50 crore provisioning for gratuity and Rs 900 crore for wage revision, which also impacted the bottom-line.