State Bank of India reports surprise loss in third quarter

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BENGALURU (Feb 9): State Bank of India, the country's biggest bank by assets, reported a surprise loss for the third quarter, hurt by lower trading income on "hardening" bond yields and higher bad loan provisions.

SBI made a net loss of 24.16 billion rupees (US$375.10 million) for the three months ended Dec 31, versus a profit of 18.20 billion rupees a year earlier. 

Analysts on average had expected a profit of 20.67 billion rupees, Thomson Reuters Eikon data showed.

Bad loans have nearly doubled in India's banking sector in the past four years, as a prolonged economic slowdown took its toll on the ability of companies to repay debt. India's 21 state-run banks accounted for the bulk of the 9.46 trillion rupees (US$147 billion) worth of stressed loans as of end-September.

SBI's bad loans have risen, also because of its merger with its five subsidiary banks earlier in 2017. The year-ago numbers have been restated, after the merger.

Gross bad loans as a percentage of total loans stood at 10.35% at end-December, compared with 9.83% in the previous quarter. Total provisions, including for bad loans, rose 12.6% to 141.71 billion rupees.

State-run Bank of Baroda Ltd, the country's fifth-largest bank, also reported results on Friday and said third-quarter net profit more than halved, after a surge in its provisions for bad loans.

Three other state-run banks — Central Bank of India Ltd, Syndicate Bank Ltd and UCO Bank — which also reported on Friday, made losses for the quarter and their bad-loan ratios also widened.

(US$1 = 64.4100 Indian rupees)