SBI’s profit growth goes down on bad loan surge

Bloomberg

State Bank of India, the country’s largest lender by assets, posted the slowest profit growth in four years as provisions for bad loans almost doubled from the previous quarter.
Net income fell 62 percent to 11.2 billion rupees ($164 million), or 1.43 rupees a share, for the three months ended Dec. 31, from 29.1 billion rupees, or 3.9 rupees, a year earlier, the Mumbai-based lender said Thursday in an exchange filing. That missed the 33 billion-rupee mean of 29 analyst estimates compiled by Bloomberg.
Chairman Arundhati Bhattacharya is trying to keep soured debt under check after the Reserve Bank of India asked lenders to recognize and make provisions for stressed assets on their books. ICICI Bank Ltd., SBI’s largest private-sector competitor, last month reported the slowest quarterly profit growth in six years after bad-loan provisions surged threefold.
SBI shares fell 1 percent to 157.35 rupees at 1:41 p.m. in Mumbai trading, extending this year’s losses to 30 percent. The S&P BSE India Bankex Index, which tracks 10 lenders, fell 16 percent this year.
The gross bad-loan ratio widened to 5.1 percent from 4.15 percent in the previous quarter. By comparison, HDFC Bank Ltd., India’s most-valuable lender by market capitalization, had a ratio of 0.97 percent. Provisions SBI made for soured debt in the latest quarter almost doubled to 76.4 billion from the period ended in September.
In December, Reserve Bank of India Governor Raghuram Rajan set lenders a March 2017 deadline to clean up their balance sheets. The proportion of Indian banks’ stressed assets, which include restructured and soured loans, to total advances surged to a 14-year high of 11.3 percent as of Sept. 30, data compiled by RBI show.

SBI’s capital-adequacy ratio stood at 12.45 percent, the filingsshowed, compared with a requirement of at least 9 percent under Basel III rules.