State Bank of India (SBI) in its first quarter results is likely to report on improvement in its asset quality. As per reports from SBI top sources bank has been able to recover bad loans worth around Rs 2,000 crore during April-June 2008.
Though top SBI executives, refused comment on this. SBI managing director SK Bhattacharyya said: “We can’t divulge details before the first quarter results announcement.”
During 2007-08 SBI’s credit quality had declined, since it had booked fresh bad loans worth Rs 2,700 crore, mainly on account of retail loans, and to some extent, mid-sized corporate loans. As per data, on March 31, 2008, the bank had gross non-performing assets (NPAs) of Rs 12,837 crore as compared with Rs 9,998 crore, a year back.
“On the other hand, the bank is slated to make a provision of around Rs 1,000 crore against mark-to-market (MTM) losses of its investment,” an SBI official said on conditions of anonymity. Official told that out of the available sum, around Rs 700 crore is expected to be provided for against depreciation of bonds the bank received from the government on account of its rights issue.
During April- June 2008 banks booked MTM losses against depreciation of bonds and equity investments. However, it is expected that SBI might click double-digit growth in the first quarter to June 30, 2008 over the corresponding period a year back in spite of the fact that the demands for loans from sectors like commercial real estate and auto has slowed down.
If we look at SBI’s bad loan management, it being said that government’s debt waiver-cum relief scheme will help SBI reduce its bad loans by another Rs 2,000 crore. SBI has waived off over dues of around 25 lakh farmers, aggregating about Rs 7,000 crore. According to SBI inside sources, “It’s estimated that around 30% of the total waived sum had become NPAs”. While as on March 3, 2008 gross NPA stood at 3.04% and the net NPA stood at 1.78%.
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