State Bank of Hyderabad reported a net loss of Rs776.64 crore for the quarter ended 30 September, due to higher provisions against bad loans. The bank reported a net profit of Rs375.31 crore in the same quarter a year earlier.
Provisions and contingencies surged 755% to Rs2,074.94 crore in the July-September quarter from Rs242.70 crore a year earlier. The loss during the second quarter was restricted due to a tax write-back of Rs197.12 crore against tax expenses of Rs189.87 crore a year ago.
The drop in profitability of associate banks might be a result of the impending merger with State Bank of India, which has been approved by all of them. In August, the respective boards of SBI, State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad and Bharatiya Mahila Bank had all approved the mega merger, which will create a large banking conglomerate in India. According to a Mint analysis, this will put SBI in the ranks of the top 50 lenders in the world.
The associate banks reported large losses as a direct result of the asset quality review (AQR) conducted by RBI in the October-December period last year, SBI management had stated earlier.