Saturday, August 11, 2012

Slippages worth Rs 3000-4000 crore to be reversed by Q3

Mumbai, August 10: When it comes to earnings, India‘s largest lender State Bank of India has nothing much to brag about. For the quarter ended June 2012, the public sector bank posted a lower-than-expected 15% growth in revenue, but deterioration in asset quality caused the major damage. SBI saw bad loans spiked 4.99% to Rs 7,000 crore in the first quarter of FY13, much higher than street estimates. Net non-performing assets also saw a jump to 2.22% from 1.82% quarter-on-year. This rise spooked investors, who dumped the stock causing it to fall nearly 4.5% to Rs 1,887.

Chairman Pratip Chaudhuri is confident that the bank will be able to reverse this situation in the coming two quarters. “As companies restructure their finances and reschedule their liabilities, we think crore Rs 3,000-4,000 crore out of the Rs 7,000 would revert back to standard category in the second quarter itself or by the third quarter,” he said in an interview to CNBC-TV18. He further adds that the slippages came in towards the end of the quarter, due to which they did not have enough response time.

On the positive side, SBI has reported only Rs 562 crore of restructured assets in the quarter, which takes its restructured book to Rs 37,000 crore. Going by historical data, only about 3% of the restructured books become losses. “So with our restructured book about Rs 37,000 crore, I think in the worst case scenario the possible loss should not be more than about Rs 1,000-1,100 crore,” said Chaudhuri. He goes on to say that restructured accounts should not increase going forward, except for in the power sector.

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