Mumbai: State Bank of India (SBI) on Friday posted a loss for the third consecutive quarter after setting aside funds to cover losses on its bond portfolio and increased gratuity.

The country’s top lender by assets turned to a loss of ₹ 4,875.85 crore in the June quarter, from a net profit of ₹ 2,005.53 crore a year earlier. A Bloomberg poll of 17 analysts forecast the bank to report a profit of ₹ 237.80 crore.

SBI reported a tax write-back of ₹ 2,379.28 crore, compared with a tax paid of ₹ 939.05 crore a year earlier.

In addition to provisions related to non-performing assets (NPAs), the bank kept aside ₹ 7,098 crore as mark-to-market provisioning towards rising bond yields, SBI chairman Rajnish Kumar said at a post results conference. It also made a ₹ 1,897 crore provision towards increased gratuity and revised wages.

In the December quarter, yield on the 10-year benchmark government bond rose by 50 basis points. Banks have to revalue their bond portfolio at the end of every quarter. In case the value of the securities is lower than the market rate, they are mandated to keep aside funds as mark-to-market provisioning.

Gross NPAs rose to 10.69% of total advances in the June quarter, from 9.97% a year earlier, and 10.91% in the March quarter.

The pace of additions of fresh slippages slowed to ₹ 9,984 crore last quarter from ₹ 26,249 a year earlier.

Kumar attributed bad loans in the retail sector to the rise in NPAs last quarter. Agriculture loans saw NPAs worth ₹ 21,830 crore due to loan waivers in Maharashtra and Karnataka. Slippages in corporate loans was, however, lower at ₹ 3,704 crore.

In the first quarter, the bank doubled its provision to ₹ 19,228.26 crore in the quarter from ₹ 8,929.48 crore a year ago.

Provision coverage ratio improved to 69.25% as of 30 June compared to 60.79% a year ago. Kumar said that the bank has made a higher provision of 71% against the two lists of stressed accounts referred to National Company Law Tribunal (NCLT) to guard against low recoveries from the insolvency proceedings.

“In September, we expect one large account where we are awaiting the NCLT order. Once that comes and resolution happens, then we will be in profit. We will also increase provisioning next quarter against the power assets. From December, there will be no looking back and we will turn profitable," said Kumar.

The bank’s net interest income rose 24% to ₹ 21,798 crore at the end of the June, from ₹ 17,606 crore a year earlier. Advances growth was muted at 7.2% on account of a fall in overseas loan book. SBI’s buyers’ credit book declined one- fifth to ₹ 13,132 crore after the Reserve Bank of India barred banks from issuing letters of undertaking following the Nirav Modi scam.

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