Friday, 10 February 2017

What to expect from SBI’s Q3 results? > Watch now !!

As India’s largest lender gets set to announce its October-December quarter results, all eyes will be on its asset quality conditions. Being the bellwether of the banking industry, anything that impacts State Bank of India (SBI) also hurts the entire banking system.

So far, with most banks having announced their third quarter results, the situation has been a bit of a mixed bag. Large private sector banks like ICICI Bank Ltd and Axis Bank Ltd have both reported a significant deterioration in their asset quality conditions.

ICICI Bank’s gross bad loans ballooned to Rs37,716. 73 crore at the end of December, rising 17.21% from the quarter ago. As a percentage of total loans, gross bad loans increased to 7.9% at the end of December, from 6.82% at the end of the previous quarter. Owing to the rise in bad loans, ICICI Bank’s net profit dropped 19% on a year-on-year basis.

Axis Bank reported Rs4,560 crore worth slippages of which Rs2,580 crore was from the so-called watchlist, while Rs1,980 crore worth loans were from outside the watchlist. Total corporate slippages were at Rs3,680 crore of which Rs1,100 crore were outside the watchlist. The watchlist is supposed to cover the list of probable slippages from the bank’s corporate loan book. The fact that there are slippages arising outside the list makes the result a rather poor one.

SBI has seen its asset quality position weaken significantly since September 2015, when the gross non-performing asset (NPA) ratio stood at 4.15%. As on 30 September 2016, the gross NPA ratio was at 7.14%. While announcing the second quarter results, chairman Arundhati Bhattacharya had said that going ahead the bank would see a higher rate of recovery in bad loans.

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