Banking

SBI First-Quarter Profit Misses Estimates as Bad Loans Rise

A security personnel stands guard in front of the gate of the State Bank of India (SBI) regional office in Kolkata May 23, 2014. Credit: Reuters/Rupak de Chowdhuri/Files

A security personnel stands guard in front of the gate of the State Bank of India (SBI) regional office in Kolkata May 23, 2014. Credit: Reuters/Rupak de Chowdhuri/Files

Reuters: State Bank of India (SBI), the nation’s biggest lender by assets, on Friday (August 11) reported first-quarter profit that missed analysts’ estimates, following a decline in net interest income and rise in bad loans.

The results are the first since SBI merged with five of its subsidiary banks and also took over a niche lender for women from April 1.

For the merged entity, net profit was 20.06 billion rupees ($312.84 million) in the three months through June, from 3.74 billion rupees a year earlier. Pre-merger, the bank‘s year-earlier profit was 25.21 billion rupees.

The result compared with the 30.29 billion rupee average analyst estimate, Thomson Reuters data showed.

Net interest income fell 3.5% to 176.06 billion rupees.

SBI, which accounts for about a fifth of India‘s banking sector assets, said for the merged entity, gross bad loans as a percentage of total loans was 9.97% at the end of June from 9.11% three months earlier and 7.40% at the end of June last year.

Indian banks have been hit by higher provisions and regulatory scrutiny as bad loans reached a record $150 billion in December. Earlier this year, the government gave the central bank greater power to push defaulting borrowers into bankruptcy proceedings.

SBI shares were down 4.8% at 0815 GMT in a Mumbai market that was down 1%.

(Reuters)