This the second consecutive quarter that the lender has made a loss.

State Bank of India (SBI), the country’s largest lender, posted it’s highest ever loss in the fourth quarter — of ₹7,718 crore due to provisions made for losses in its bond portfolio and for bad loans.

This the second consecutive quarter that the lender has made a loss. In the Oct-Dec quarter, the bank made a loss of ₹2,416 crore while during the fourth quarter of the previous financial year, the loss was ₹3,442 crore. The numbers are not exactly comparable on a year-on-year basis, since the lender merged all its five associate banks and Bharatiya Mahila Bank at the beginning of 2017-18.

The bank has made ₹24,080 crore provision for bad loans and ₹4,761 crore for investments, mainly in its bond portfolio.

“Let me confirm that the recognition [of bad loans] is completed,” SBI chairman Rajnish Kumar said at the press conference.

He pointed to the ‘strength’ of the balance sheet as the loan loss coverage ratio improved by almost 500 basis points to 50.38% in one year. “Our capital position is also strong,” he said. The bank’s capital adequacy ratio was 12.6% as on March 31, including tier-I capital of 10.36%.

The other reason for the bank’s confidence in improving its performance is that the resolution of stressed assets has started, resulting in banks recovering loans, albeit after taking deep haircuts.

Last week, lenders successfully sold Bhushan Steel — that was referred for bankruptcy following default — to Tata Steel. The SBI has recovered 72% of the loans given to the steel company from the sale.

The SBI has an exposure of ₹49,116 crore for the 12 companies against which bankruptcy proceedings were initiated by banks, after being identified by the Reserve Bank of India (RBI) for action under the Insolvency and Bankruptcy Code. The SBI has made a provision of 56% on these accounts and expects to take 52% on these accounts, Mr. Kumar said.

There was also a second list of accounts, where SBI has an exposure of ₹28,510 crore and has made 63% provisioning. However, proportion of haircut from these accounts are expected to be higher, a bank official said.

The SBI expects resolution of the first list of accounts that was referred to the National Company Law Tribunal (NCLT) by the end of September, and for the second list by the end of the financial year.

“Resolution of NCLT accounts will lead to lower GNPAs, in addition to better margins,” the bank said in a presentation to the investors.

Shares of SBI rose 3.7% to close at ₹254.15 on the BSE, while the overall indices ended almost flat.

“Last year [2017-18] was disappointing. There is hope this year. FY20 will happiness,” Mr. Kumar said indication that a real turn around for the bank would start from the next financial year.

The SBI reported a gross NPA of 10.91% at the end of March which is 56 bps higher than the preceding quarter. It aims to bring down gross NPA below 6% by March 2020.

During the period under review, ₹29,037 crore worth loans slipped into the NPA category, of which ₹17,435 crore was from stressed standard asset category. SBI has classified telecom player Aircel as NPA and has provided 50% of its exposure after the company filed for bankruptcy.

Going ahead, the SBI said it has redefined the segment that lends to large corporates which will now comprise of only AA rated companies. The lender expected loan growth to be 10% and deposit growth of 9% this fiscal. It is also planning to divest a stake in the merchant banking arm — SBI Caps — by roping in a partner and is looking to sell between 26-49%.