Text size:

  • Small
  • Normal
  • Large

State Bank of India profits decline amid slowdown

India Dispatch: State Bank of India reported a 13.6 per cent decline in quarterly net profits yesterday, as bad loans weigh on Indian banks amid slowing economic growth in the country.

State Bank of India (SBI) reported a 13.6 per cent decline in quarterly net profits yesterday, as bad loans weigh on Indian banks amid slowing economic growth in the country.

Net profits at India's largest lender fell to 32.4 billion rupees (Dh1.95bn) in the quarter between April and June, down from 37.5bn in the same period last year.

Public sector banks in particular have been hit by non-performing assets (NPAs) after India's economic growth slowed to a decade low last year and because of their exposure to stalled projects in areas including mining and infrastructure.

Gross non-performing assets for SBI rose to 5.56 per cent of total loans in the quarter compared to 4.99 per cent in the same months last year.

Other major public sector banks, including Bank of Baroda and Punjab National Bank have reported increases in non-performing assets.

"It's never a one-way street," said Pratip Chaudhuri, the chairman of SBI. "It's a continuous battle and we are doing our best to fight. There is a great realisation across the country that NPAs are not the problems of banks alone. These stalled projects are a national problem. With this greater realisation ... we think things should get better. In the overall context of demand moderating for many industries, in fact whatever is being possibly done right at one end is coming to a knot at the other."

Sonam Udasi, the senior vice president and head of research at Idbi Capital Markets, said that subdued growth in India was likely to remain a challenge for banks in the coming quarters.

"As growth started tapering off, a lot of corporates starting taking the pressure, tremendous pressure," said Mr Udasi. "The feeling until about three or six months back was that things would start to even out when growth starts picking up. If you speak to most bankers in India, they will tell you that while slippages are an ongoing concern because of the economic slowdown, growth is not picking up.

That is what is the biggest problem because your top line doesn't grow."

He explained that sectors including power, which public sector banks had lent a lot of capital to, were typically highly leveraged.

Another issue was the weakness of the rupee, which is preventing the central bank from cutting rates to make borrowing costs cheaper and help to stimulate economic growth, Mr Udasi added.

SBI is among the lenders that have exposure to Kingfisher Airlines, the fleet of which has been grounded since last October.

Mr Chaudhuri said that SBI had total exposure of about 16bn rupees to the airline controlled by Vijay Mallya and the bank had already managed to recover about 2bn rupees through sales of shares. SBI has the largest exposure out of the consortium of lenders to the airline.

As the process of recovering the debts continues, lenders took possession of Kingfisher Airlines' headquarters in the suburbs of Mumbai on Saturday, according to a report in the Indian business newspaper Mint, citing anonymous bankers.

 

business@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National