“We need better management of what we have, and should have procedures in place to pick and choose a lot better: We’ll have a lot better early warning signal,” State Bank of India said.
SBI posted a 34 percent drop in third-quarter net profit of 22.34 billion rupees in the quarter ended December, analysts estimate 25.3 billion rupees.
Net interest margins, a key measure of profitability were largely unchanged 3.51 percent to 3.49 percent in the previous quarter.
Gross non-performing loans as a percentage of total assets made up 5.6% and 5.7% in the previous quarter.
“Revenue growth figures came from a line of credit, but no one is talking about the growth of the whole purpose of asset quality,” said Manish Ostwal, banking analyst at KR Choksey Shares & Securities.
BI, which accounts for a quarter of India’s loans and deposits, saw a lukewarm response from foreign investors for $ 1.28 billion of shares last month, largely because of concerns about its asset quality and earnings growth slowing economy.
NO RECOVERY INSIGHT
SBI chairman Bhattacharya, who took office last October, is under pressure to ease the non-performing loans and reverse weaker profit growth, while helping to calm investors, who were included in the bank’s shares nearly half of their peak in 2010.
Bhattacharya said that the bank was reorganized outstanding loans worth 561 billion rupees at the end of December, 61 percent more than a year ago.
Bad debts, however, are likely to rise. Last month, India’s top private sector lender ICICI Bank (ICBK.NS) warned that corporate defaults may rise in the coming few quarters. ICICI posted the slowest profit growth in four years December quarter.
SBI Chief Financial Officer R.K. Saraf also said that he expects the banking sector credit problems linger, as the Indian economy is growing at its slowest pace in a decade.
«Mid corporates nor the resources, nor is bandwidth management, not the means to withstand a prolonged downturn in», – Saraf said. “We feel going forward, it will sometimes stress.”
Ratings agency Fitch expects stressed assets of Indian banks with bad debt and restructuring, 14 percent of total loans in March 2015, up 9% in March 2013.
SBI shares, valued at about $17 billion, closed down 1.7 percent at 1,475.10 rupees in the Sensex had closed down 0.9 percent.