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State Bank Of India Reports Record Loss Of $1.1 Billion In March Quarter, Shares Surge

State Bank Of India Reports Record Loss Of $1.1 Billion In March Quarter, Shares Surge

State Bank of India (SBI) reported a loss of Rs. 7,718 crore ($1.1 billion) – its biggest ever – in the January-March quarter, as the country’s biggest lender set aside more provisions for bad loans after a change in banking regulation.. The loss for the three months to March 31 was deeper than what the market had expected. Analysts on average had expected SBI to report a loss of Rs. 1,285 crore, according to Thomson Reuters data. In the December quarter, SBI had posted a loss of Rs. 2,416 crore.
SBI management projected a recovery over the next two years, sending its shares nearly 4 per cent higher on Tuesday. SBI shares also extended gains today, rising over 3 per cent. “Last year was a year of despair. This year is a year of hope, and next year will be a year of happiness,” said Chairman Rajnish Kumar after the results. SBI, which accounts for more than a fifth of India’s banking assets, said it aims to grow loans at an annual average of 12 per cent through March 2020, nearly halve its gross non-performing loan ratio, bring down provisioning costs and improve margins.

In the March quarter, SBI’s gross bad loans as a percentage of total loans rose to 10.91 per cent from 10.35 per cent three months earlier and 6.90 per cent a year prior, the lender said in a statement. SBI’s net interest income rose to Rs. 19,974 crore, from Rs. 18,688 crore in December quarter.

Tighter Reserve Bank of India (RBI) rules announced in February, which did away with half a dozen loan restructuring schemes, have led to banks reporting a surge in bad loans in the March quarter, and several of them reporting losses. This led to SBI’s provision for bad loans jumping to Rs. 24,080 crore, from Rs. 17,760 crore in December quarter.

However, SBI, which accounts for more than a fifth of India’s banking assets, said it aims to grow loans at an annual average of 12 per cent through March 2020, nearly halve its gross non-performing loan ratio, bring down provisioning costs and improve margins. “Last year was a year of despair. This year is a year of hope, and next year will be a year of happiness,” said Chairman Rajnish Kumar.