SBI jumps despite $4.7bn bad-loans

New Delhi / AFP

State Bank of India, the country’s largest lender, jumped the most in more than two months after reporting a bad-loan watch list that’s smaller than its closest rivals.
Shares of the lender surged 6.4 percent to 195.90 rupees in Mumbai trading, paring this year’s losses to 13 percent. About 313bn rupees ($4.7bn) of State Bank’s loans are under stress and two-thirds of it could sour, Arundhati Bhattacharya, chairman of the bank said, after it posted the biggest profit drop since 2011. That compares with ICICI Bank Ltd.’s 440bn rupees.
About 2% of loans at State Bank, which accounts for one fifth of all credit in India, are at risk of souring even after a central bank audit prompted lenders to set aside higher provisions for bad loans. ICICI Bank last month warned that up to 10 percent of its loans could become non performing, while Axis Bank Ltd. predicts that more than 6 percent of loans may sour in coming quarters.
“Investors are pleasantly surprised as SBI’s watch list for stressed loans is lower than expected, ” Siddharth Purohit, a Mumbai-based analyst at Angel Broking Ltd. said by phone. “This hints that worst of asset quality pain is over for SBI.” Net income for the Mumbai-based bank fell 66% to 12.6bn rupees for the three months through March from 37.4bn rupees a year earlier,
reports said.