SBI denies help to Kingfisher

Brewing more troubles for the already cash-crunched Kingfisher Airlines, the State Bank of India has expressed doubt over extending help to the airlines by putting the case in the 'Doubtful case.'

SBI chairman Pratip Chowdhury said, “Kingfisher has turned into a doubtful account for the bank.” According to him, SBI has an exposure of Rs 1,400 crore in Kingfisher while its exposure to Air India is about Rs 1,200 crore. However, it maintained that the government will extend an olive branch to the ailling airlines.

Chowdhury announced that State Bank of India has declared a ‘War on NPA’ (on sticky loans tagged as ‘Non-Performing Assets) and that appears to have begun to pay off with a sign of improvement in asset quality. The ‘War’ has brought down Net NPAs from Rs 18,803 crore in December to Rs. 15,819 crore (1.82 per cent of assets) by end of March 2012.

The grand old bank of India has posted a record high profit of Rs 11,707 crore in 2011-12 against Rs 8,265 crore in 2010-11 with over 41 per cent increase on year-on-year basis. “This is third highest after Reliance and ONGC”, claimed Chowdhury while announcing the Bank’s annual results.

SBI Chairman claimed, “It is a blockbuster result..… even if put modestly.” Announcing a dividend of Rs 35 per share, he hoped to get back better ranking from Moody on the basis of this ‘blockbuster’ result. It may be recalled that Moody’s lower SBI’s financial strength to D+ due to its lack of equity capital and deteriorating asset quality. After that, the Union Government has injected Rs 7,900 crore as fresh equity by the end of March 2012.
 
The ‘magic’ behind this impressive results lies on higher earnings from retail loans and a turnaround in treasury income, said a SBI official. Higher interest income and lower provisioning for bad loans helped the bank to come out from ‘Highest NPA Bank’ tag it had a year back. This has led to post a quantum jump in its pre-Tax profit from Rs 1,260 crore to Rs 5,235 crore.