SBI Q4 net falls 66% as bad loan provisioning doubles

State Bank of India (SBI), the country's largest lender by assets, reported a 66-per cent fall in its net profit for fiscal fourth quarter ended 31 March 2016, due to sharply higher provisioning for bad loans.

SBI, like several other state-owned banks, registered the sharpest fall in profits since 2011 following a clean-up order after a central-bank audit triggered a surge in provisions for bad loans.

Net income of the bank fell 66 per cent to Rs1,264 crore, or Rs1.64 a share, for the three months ended 31 March 2016. That's down from Rs3,740 crore, or Rs5, a year earlier, the Mumbai-based lender said in a Friday exchange filing.

SBI said in a statement its bad loan provisions more than doubled from a year earlier to Rs12,139 crore ($1.81 billion), squeezing net profit to Rs1,264 crore for the quarter ended 31 March 2016 from Rs3,742 crore a year ago.

So far, a dozen Indian state-owned lenders have reported combined losses of more than Rs 20,000 crore ($3 billion) after the Reserve Bank ordered them to tackle bad loans. RBI chief Raghuram Rajan has set a March 2017 deadline for cleaning up bank balance sheets.

SBI, which accounts for nearly a quarter of India's loans and deposits, also saw its gross bad loans as a percentage of total loans rise to 6.5 per cent in March from 5.1 per cent in December.

Loans grew 13 per cent in the 12 months to 31 March, the bank said. Its domestic net interest margin declined to 3.27 per cent in March from 3.54 per cent a year earlier.

SBI's gross bad-loan ratio widened to 6.5 per cent from 5.1 per cent in the previous quarter. Provisions for bad loans jumped 58 per cent from December to Rs12,100 crore by March, the filing showed.

The proportion of Indian banks' stressed assets, which include restructured and soured loans, to total advances surged to a 14-year high of 11.3 per cent as of 30 September, data compiled by RBI show.

In December, Reserve Bank of India governor Raghuram Rajan set lenders a March 2017 deadline to clean up their balance sheets.