State Bank of Travancore(SBT) Q3 result, posts loss of Rs 68 crore

SBI associate State Bank of Travancore(SBT) today reported a net loss of Rs 67.76 crore for third quarter ended December due to four-fold jump in bad loans. 

The bank had registered a net profit of Rs 91.47 crore in the year-ago period, it said in a BSE filing. However, the third quarter figures show that bank's net loss narrowed as compared to net loss of Rs 587.69 crore in the second quarter ended September 2016. 

As asset quality of the public sector bank slipped further during the quarter, the gross non-performing assets (NPAs) rose to 12.22 per cent in December quarter up from 3.87 per cent a year ago. Net NPA stood at 8.03 per cent against 2.46 per cent a year earlier. 

In absolute value, gross NPAs were Rs 8,169.97 crore, against Rs 2,603.88 crore. Net NPAs rose to Rs 5,121.89 crore from Rs 1,628.07 crore a year earlier. Thus, to cover bad loans, bank had to make provisions including contingencies of Rs 441.61 crore in the December quarter as compared to Rs 318.65 crore a year ago. 

SBT said it has changed its policy of Income Recognition and Asset Classification (IRAC) in respect of certain common loans and advances within the SBI Group, that resulted in higher provisions for bad assets. As per the policy, the bank had adopted the lowest IRAC status withing the group and made provisions accordingly. And the change is being made in view of the inherent weakness in these loans. 

"This has resulted in classification of standard advances amounting to Rs 578.30 crore as NPA, additional provision on NPAs by Rs 889.92 crore, reduction in interest income by Rs 4.08 crore, classification of standard investment amounting to Rs 2.46 crore as NPA and thereby increase in provision for depreciation on investment by Rs 2.46 crore," it said. 

On the merger of the bank with parent SBI, it said the respective boards of SBT and SBI passed resolution in May 2016 to enter into negotiations for acquiring business including assets and liabilities of SBT under Section 35 (1) of SBI Act, 1955. "The scheme of acquisition of SBT by SBI has been approved by the Board of Directors on September 26, 2016," State Bank of Travancore said.