New RBI rules on bad loans cause SBI to post worst quarterly loss at Rs 7718 crore

Gross bad loans as a percentage of total loans in the fourth quarter rose to 10.91% from 10.35% three months earlier and 6.90% a year prior, SBI said.

State Bank of India (SBI) reported its deepest-ever quarterly loss on Tuesday, far beyond analyst estimates, as the country’s biggest lender set aside more provisions for bad loans after a change in banking regulation.

Net loss for the three months ended March 31 was Rs 7718 crore $1.13 billion), versus an average Rs 1285 crore loss from 16 analyst estimates complied by Thomson Reuters. The result also compared with a restated net loss of Rs 3442 crore in the same period a year earlier.

Banks saw soured loans and provisions surge in the quarter after the Reserve Bank of India (RBI) in February eliminated half a dozen loan restructuring schemes to hasten the clean-up of near-record levels of bad debt. Most state-run banks that have reported quarterly earnings so far have posted losses.

SBI’s bad-loan provisions for the quarter more than doubled from a year earlier to Rs 28096 crore. Gross bad loans as a percentage of total loans rose to 10.91% from 10.35% three months earlier and 6.90% a year prior, the lender said in a statement.

Net interest income for the quarter fell 5.2% to Rs19974 crore.

Shares of the lender rose as much as 6.2% after the results, when the BSE Sensex was 0.1% higher.

SBI shares were trading 5.2% up at Rs 257.85 on BSE in afternoon trade.