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A jump in provisions for bad loans and cost pressures dragged State Bank of India’s net profit down 34 per cent to ₹2,234 crore for the October-December quarter.
“I cannot say this is the end…To see the stress reducing, you need to give at least two quarters after the GDP turnaround. But with the GDP going nowhere and IIP (Index of Industrial Production) actually tanking, it’s difficult to see an end of this stress,” said Arundhati Bhattacharya, Chairperson, SBI.
The country’s largest bank set aside provisions (amount earmarked to cover bad loans) of ₹3,429 crore, up 24 per cent against ₹2,766 crore in the corresponding quarter last year.
In addition, an increase of 35 per cent in staff expenses and one-time provisions of ₹1,584 crore towards pension (₹600 crore), mark-to-market loss (₹750 crore) and deferred tax liability (₹234 crore) further weighed on the profit during the quarter. Without these one-time provisions, the profit would have grown by 12 per cent.
Bad loans Gross non-performing assets (NPA) worsened to 5.73 per cent as on December 2013 compared with 5.3 per cent in December 2012. “The mid-corporate and SME (small and medium enterprise) segments have shown more slippages (about ₹9,000 crore). We need to do a lot of work around that and will continue to support the customers who deserve it,” Bhattacharya said.
Fresh slippages during the quarter increased to ₹11,400 crore. While the bank restructured assets aggregating ₹6,165 crore during the quarter, the restructuring pipeline was estimated at about ₹9,000 crore over the next few quarters.
On the positives, net interest income (difference between interest earned and expended) increased 13 per cent and other income was up 16 per cent.
Year-on-year, both total advances and deposits have grown 17 per cent each.
The bank is taking initiatives to see that the robust sectors continue to grow and we can get more out of the strong segments, Bhattacharya added.
On Friday, SBI shares ended weaker at ₹1,475.10 per share, down 1.65 per cent over its previous close on the BSE.
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