SBI Reports Surprising Q3 Loss of Rs 2,416 Crore

State Bank of India reported a surprise loss for the first time in 17 years as its income from treasury operations fell and provisions for bad loans surged.

India's largest bank reported a loss of Rs 2,416.4 crore in October-December period against a profit of Rs 1,581.5 crore in the previous quarter, according to the company's exchange filing. That compares to the Bloomberg’s analyst consensus expectation of a Rs 2,059 crore profit.

“The net loss has to be viewed with hardening of bond yields, treasury losses, provisions for payments of employees,” SBI Chairman Rajnish Kumar said in the press conference to announce the earnings.

Net interest income, or the core income of the lender rose 0.5 percent to Rs 18,688 crore, largely in-line with the estimated Rs 19,092 crore.

Revenue from treasury operations fell 8.7 percent to Rs 20,091.3 crore from Rs 22,000.2 crore in the previous quarter. Treasury operations are usually the second largest contributor to SBI’s revenue. The lender also incurred a treasury loss of Rs 3,260 crore.

Asset quality for the public lender deteriorated on a sequential basis. Gross bad loan ratio increased to 10.35 percent of the total assets from 9.83 percent earlier. Net non performing asset ratio stood at 5.61 percent from 5.43 percent in the previous quarter. Total provisions and contingencies against bad loans fell 1.4 percent on a sequential basis to Rs 18,876.2 crore. But the lender reported a divergence of Rs 23,239 crore compared with the Reserve Bank of India’s assessment as of March 2017. These assets were duly classified as NPAs and a provisioning of Rs 5,720.6 crore was made for the same, SBI said in its exchange filing

Ahead of the earnings announcement, the stock has gained a little over 8 percent over the last 12 months. This compared to a 26.3 percent rise in the NSE Nifty Bank Index.

(This story was originally published on BloombergQuint and has been republished with permission.)

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