State Bank of India, the country’s largest bank, reported a sharp increase in its quarterly net loss in Jan-Mar after setting apart a whopping Rs 24,080 cr in the three months to cover bad loans extended by the company in the past.
Even excluding the write-off and provisions, the company’s operating profit was down compared to a year ago because of a sharp increase in operating expenses.
The company’s operating profit fell to Rs 15,883 cr from Rs 16,026 cr a year ago despite a nearly 19% jump in its total income.
Total higher revenue was driven by interest income, which rose 18% on year to Rs 55,941 cr.
The lower operating profit was primarily because of higher (non-interest) operating expenses, which jumped 34% on year to Rs 16,586 cr.
Besides operating expenses, the bank also saw a faster increase in the interest paid out.
Against the 18% increase it saw in its interest income, interest expenses rose 22.7% on year Rs 35,967 cr.
This had an impact on the company’s retail banking division, where pretax profit fell to Rs 3,587 cr this year from Rs 6,253 cr last year and Rs 7,789 cr in the preceding three months.
PROVISIONS
But what really pushed the company into the red was a sharp increase in provisions and write-offs of bad loans.
Against Rs 10,993 cr set apart for NPAs in the same quarter last year, the company allocated Rs 24,080 cr for covering NPAs this year on a net basis (after adjusting recoveries). In the preceding three months, it was only Rs 17,760 cr.
Non-NPA related provisions also increased sharply to about Rs 4,016 cr in the fourth quarter this year, compared to just Rs 747 cr for the same quarter last year.
Due to the total provision of Rs 28,096 cr, the company recorded a massive pretax loss of Rs 12,213 cr for the fourth quarter this year, compared to a profit of Rs 4,286 at the pretax level last year.
The pretax loss was confined to the company’s corporate banking division and treasury division. In the corporate banking division, SBI had pretax losses of Rs 13,525 cr compared to a loss of only Rs 4,845 cr last year.
In the treasury division, it had a pretax loss of Rs 3,350 cr compared to a profit of Rs 1,627 cr last year.
After a write-back of Rs 4,495 cr in terms of tax, the net loss for the quarter was Rs 7,718 cr, compared to a profit of Rs 2,815 cr last year and a loss of Rs 2,416 cr in the preceding quarter.