SBI’s bad loans didn’t affect it much. Here’s the proof
India’s state-owned bank has reported its biggest six-quarter gain to reduce provisions for credit losses in the last quarter, but investors were wary of the prospects of asset quality after the merger of its five subsidiary banks to From April.
The OSE, which accounts for more than one-fifth of banking assets in India, merged its five subsidiary banks with itself and also supported a niche lender with women as of April 1 in the first movement consolidation of the industry.
The bank announced on Friday an independent net profit, including its subsidiaries’ contributions, more than doubled compared to the previous year to $ 28.15 billion rupees ($ 433.5 million) for its fiscal fourth quarter on 31 of March. While the increase in the result in line with expectations, OSE One surprised the market with a decrease in the NPL ratio on a quarterly basis.
However, including the results of the subsidiary banks, has now resumed, the bank reported a net loss of about 33 billion rupees in the March quarter, raising concerns that the high rate of bad loans in the subsidiaries could Weigh on the overall balance.
He also leapt on a “watch list” of potential loans to 324.27 billion rupees representing the consolidated entity as of April 1 against the 133 billion rupees for the parent bank.
SBI Chairman Arundhati Bhattacharya told a press conference that the bank had already taken the “maximum pain” by merging the subsidiaries and taken comprehensive measures when necessary, even if global delivery costs were expected to continue Being “high”, in March 2018.
“In the short term, there could be a bit more pain … Slightly longer term, things are certainly on the rise,” Bhattacharya said.
A faster resolution of a record $ 150 billion in gross assets in India’s banking sector is a top priority for Prime Minister Narendra Modi’s government, which owns majority stakes in more than 20 lenders who dominate the sector.
This month, the government amended its laws, giving the central bank greater power to identify and enforce the resolution on specific loans.
For the three months to March, provisions for impaired loans from OSE fell by 9.4% compared to the previous year, to $ 109.93 billion rupees for the parent bank. Gross impaired loans as a percentage of total loans fell to 6.9% in March from 7.23% in December, but Rose absolute to 1.12 trillion rupees.
Investec Securities on a note after the results that the profit of the parent bank exceeded the estimates, but calls the consolidated loss of 33 billion rupees to miss miss. He said the findings reflect his concern about the low yield of the merged bank, maintaining its “hold” rating on the stock.