Merger of associate banks with SBI okayed

State Bank of India

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

SBI reported a consolidated net profit of Rs2,005.53 crore for the April-June 2017-18 quarter against a consolidated net profit of Rs2,520.96 crore for the year-ago quarter.

Of the total slippages during the quarter at Rs 26,249 crore, Rs 8,053 crore was from the corporate portfolio, while the remaining Rs 17,880 crore came largely from the retail book.

The bank in a statement said the net profit for the period under review zoomed by 436 per cent for the period under review from Rs 374 crore posted during the previous year corresponding period by aggregating the historical audited numbers of erstwhile associate banks, Bharatiya Mahila Bank and its own for comparison purposes.

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.

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The bank's consolidated net profit, including that of its asset management and insurance arms, grew nearly three times to Rs3,032 crore from Rs1,046 crore a year ago.

For the merged entity, net profit was Rs 20.06 billion rupees in the three months through June, from 3.74 billion rupees a year earlier.

While the poor state of corporate loan books is well known, what turned worrisome during the quarter was the sudden surge in the retail lending portfolio of the banks about which SBI is confident of coming back. Net bad loans ware at 5.6 per cent of total loans.

SBI says it did not gain from the merger as its loan books did not grow proportionately during the first quarter of the merger.

"As a result of the merger process, the follow-up required on the retail side was missing, and this was expected because a lot of data and mapping wasn't available". "This one quarter we have only spent to getting our house in order whether it be data merger, people transfers, reorganisation of the branches, so all of that has happened".

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