Faced with huge bad loans or non-performing assets (NPAs) pressure, country’s largest lender State Bank of India (SBI) is expecting that the bad debt may surge in the coming quarter, which would result in hitting its profitability. “In the next quarter too, NPAs will rise further that will affect our profits,” SBI chief Arundhati Bhattacharya told reporters here.
Repeating her saying in third quarter earning conference, she added, “I will say the same thing, that our profits were impacted due to rise in non-performing assets (NPAs).”
In fact, SBI’s gross NPAs, or bad loans, soared to Rs 72,791.73 crore at the end of the December quarter as against Rs 61,991.45 crore a year earlier. The mounting pressure due to bad loans hit profitability of SBI as its consolidated profit plunged 67 per cent to Rs 1,259.49 crore for the quarter on account of higher provisioning for bad loans.
Reeling under stressed assets, State-owned banks’ third quarter performance can at best be described as dismal, with Bank of Baroda (BoB) reporting a loss of over Rs 3,342 crore, the highest from any bank so far. A total of 27 public sector banks have written off a staggering Rs 1.14 lakh crore for bad loans in 2012-15, with the last fiscal alone witnessing a steep 53 per cent rise in write-offs as part of the balance-sheet clean-up.
The intention of the opening up of the Japan desk, Bhattacharya said, is to facilitate Japanese investors who are keen to put money in India. “We will inform them about their regulatory requirements, their tax requirement etc. Our Japan desk will try and provide the kind of information which Japanese investors and entrepreneurs should know in order to come to this country,” she said.
The SBI chairman is of view that there are many Japanese who want to set up joint ventures and often face difficulty in choosing a right partner to suit their requirements. “On the other side of the spectrum, there are many Indians who want to bring some capital from Japan as well as source technical expertise from there,” she said, adding that the Indians too are not aware whom to approach and so we will try to bridge that link through our Japan desk.