New Delhi, Feb 15 (KNN) The small and medium enterprises (SMEs) accounted for a large stress on assets and bad loans of the public sector lender State Bank of India (SBI), which had Rs 9,500 crore slippage only from SMEs and mid-corporates during the third quarter of the fiscal.
“SBI also had Rs 11,000 crore in fresh slippages, including Rs 9,500 crore from SMEs and mid-corporates and added Rs 6,165 crore into the restructured book during the quarter, while a cleaning up of balance sheet resulted in a write-off of around Rs 5,000 crore,” SBI chairperson Arundhati Bhattacharya has said.
While reviewing SBIs third quarter review for this fiscal, Bhattacharya yesterday said that bulk of the stress on assets came from mid-corporate and the small-and-medium enterprise (SME) segment and hoped for a recovery with higher GDP growth.
SBI posted a 34 per cent decline in net profit at Rs 2,234.34 crore for the third quarter of the fiscal on account of higher provisioning for bad loans.
“We need at least a couple of quarters of uptick in GDP for the asset quality to be better. I see more pain coming in,” she said.
SBI has decided to move the stressed assets recovery branches that were reporting to the national banking group so as to have better focus and outcomes.
The SBI Chairperson said that the public sector lender has created posts for four general managers – North, South, East, West, who will report to the stress management group and will actually be owning these stressed asset recovery branches in the circles.
SBI also plans to conduct weekly reviews and install new technology to quickly identify loan accounts showing signs of stress to prevent further weakening of its asset quality.
On a standalone basis, SBI had a net profit of Rs 3,396 crore in the October-December quarter of FY14. Total provisioning of non-performing assets jumped up by 23 per cent to Rs 3,428.59 crore during the third quarter of the fiscal, as against Rs 2,766.18 crore a year ago. SBI’s portfolio quality declined further during the quarter. Gross non-performing assets (NPAs), which represents portion of bad loans, stood at Rs 67,799.33 crore at the end of the third quarter, up from Rs 53,457 crore in the year-ago period.
Gross NPAs, as a per cent of gross advances, rose to 5.73 per cent in the quarter, as against 5.30 per cent a year ago. Meanwhile, net NPAs during the third quarter rose to 3.24 per cent, from 2.59 per cent in the period a year earlier. The core profitability gauge, net interest income, grew 13.10 per cent to Rs 12,640 crore, while non-interest income rose to 4,190 crore from Rs 3,626.74 crore.