New Delhi: India's largest lender State Bank of India's asset quality is improving from last year, Chairman Pratip Chaudhuri said Friday, amid a slowing economy, but its stocks were hit on that day after two of its public sector peers reported a significant rise in their bad loans.
SBI will announce its Apr-Jun quarter results on August 8, Chaudhuri said on the sidelines of a conference to announce the conclusion of the bank's $1.25-billion fund raising via a dollar bond sale.
Earlier Friday, Punjab National Bank, India's second largest state-run lender, said its gross non-performing assets (NPAs), or bad loans, increased to 3.34% of advances as on June 30 from 2% in the same period previous fiscal year, while its net NPAs rose to 1.68% from 0.86%, although it posted a jump in its net profit.
Union Bank of India's gross NPAs rose to 3.76% as on June 30 from 2.57% in the year-ago period, while its net NPAs increased to 2.2% from 1.32%.
In contrast, ICICI Bank, the country's largest private sector lender, Friday said its gross NPAs fell to 3.54% of advances as on June 30 from 4.36% in the same period previous fiscal year, while its net NPAs also decreased to 0.71% from 1.04%. However, other private sector lenders like Axis Bank and Kotak Mahindra Bank, which reported their earnings few days back, also showed an erosion in their asset quality.
Shares of State Bank of India Friday ended at Rs 1,941.20 on the Bombay Stock Exchange, down 3.77%, while the Sensex rose 1.2% to 16,839.19.
Earlier this week, global credit rating agency Standard & Poor's said that asset quality of banks in the four-nation BRIC group, including India, may come under pressure over the next 12-24 months due to a slowdown in economic growth, while the lenders' ties with the government will support their credit profiles.
India's gross domestic production (GDP) grew at a nine-year low of 5.3% in the March quarter, while interest rates remain high in the country due to monetary tightening by the Reserve Bank of India to control inflation.
India's public sector banks account for almost three-fourths of the aggregate deposits and credit in the Indian banking system, with the government as the majority shareholder in these banks.
Indian state-run banks' NPAs were at 3.3% of advances in the financial year ended March 31, 2012 against 2.31% a year ago.
The Indian government is expected to provide Rs 145.88 billion for recapitalization of public sector banks in the current financial year 2012-13.
Earlier April, S&P lowered its long term credit outlook on India to 'negative' from 'stable' due to the country's deteriorating economic growth, widening current account deficit and slow pace of fiscal reforms, but affirmed its long term rating at 'BBB-' albeit with a hint that the rating may be downgraded if the situation worsens.
Subsequently, the agency cut outlook on its long-term counterparty credit ratings on 11 major Indian public and private sector financial institutions, including SBI.