IPO gains lift SBI net manifold to `1840 cr

  • IPO gains lift SBI net manifold to `1840 cr

IPO gains lift SBI net manifold to `1840 cr

State Bank of India (SBI), India's largest lender, has posted a 37.7 per cent decline in standalone net profit at Rs 1,581.55 crore in the September 2017 quarter as against Rs 2,538.32 crore in the same period of previous year amid a rise in bad loans.

To set aside enough buffers against the expected bad loans, SBI's provisions increased 87 percent over the previous three months to Rs 18,418 crore in the quarter ended September. "During the quarter, fresh slippage to NPA category was around Rs 2,000 crore", the lender's Managing Director and CEO Usha Ananthasubramanian told reporters here.

It's loan assets degrew marginally at Rs 1.52 lakh crore while Ananthasubramanian said signs are visible for better credit demand in the next two quarters. On a consolidated basis, the bank's net profit of Rs 1,840 crore for the second quarter was substantially higher than the Rs 21 crore reported in the corresponding period past year.

The current quarter's profits are not strictly comparable as this year's results include the earnings of the merged associate banks. Net interest income, or the core income, rose 27.3 percent to Rs 18,586 crore, also lower than estimates.

The huge growth was driven by part sale of stake in SBI Life Insurance in a public offering. Of these slippages, around Rs4,538 crore was from the corporate sector and 81% of this came from its so-called watchlist of stressed accounts.

The lender reported fresh addition to gross non-performing assets of Rs9,026 crore compared to Rs26,249 crore in the quarter ending June. Provision Coverage Ratio (PCR) for bad loans increased from 60.79 per cent in Q1FY18 to 65.10 per cent in Q2FY18.

Gross NPAs' ratio fell to 9.83 per cent from 9.97 per cent in the last quarter, while the net bad loan ratio decreased relative to the previous quarter to 5.43 per cent from 5.97 per cent. The sluggish loan growth was due to the corporates loan book shrinking. Home loans grew by 12.7 per cent to Rs 2,90,450 crore as of September 2017.

Commenting on the numbers, which was lapped up by the market with an over 6 per cent rally, chairman Rajnish Kumar said, "this is a very satisfying quarter as far as our performance is concerned".

On capital raising plans, the SBI chief did not indicate specific steps to raise more capital but added that at present the capital position of the bank was strong and would like it to be stronger.