State Bank of India Q3 Profit Slumps 62% on Higher Bad Loans
Shares of Bank of India slumped as much as 8 per cent to Rs 83.2 on Thursday after India's third biggest state-run lender reported a loss of Rs 1,506 crore for the December quarter because of doubling of provisions for bad loans.
Bank of India had reported a net profit of Rs 173 crore in the year-ago quarter.
Bank of India's provisions for bad loans more than doubled to Rs 3,604 crore in the December quarter, against Rs 1,584 crore in the year-earlier period.
Analysts have attributed the sharp rise in provisions in the December to the Reserve Bank's order asking lenders to treat some loans to stressed lenders as non-performing even if they have not defaulted yet.
The RBI's directions followed Governor Raghuram Rajan's call for clean-up of bank balance sheets by March 2017. The banks have been asked to make required provisions during the third and fourth quarters of this fiscal year ending in March.
Gross non-performing loans at Bank of India soared to Rs 36,519 crore against Rs 29,894 crore sequentially. As a percentage of total advances its non-performing loans stood at 9.18 per cent against 7.55 per cent in the September quarter.
Its net non-performing loans, which is bad loans without provisions, stood at 5.25 per cent of total advances, compared to 4.31 per cent sequentially.