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Weighed down by a jump in provisions towards bad loans, State Bank of India reported a 32 per cent fall in its first-quarter net profit, at ₹2,521 crore, from the year-ago period.
Provisions towards loan losses and standard assets were up 89 per cent and 131.58 per cent year-on-year (yoy), respectively, at ₹6,340 crore and ₹917 crore, respectively, for the June quarter.
With India’s largest bank seeing a slowdown in accretion of bad loans at ₹8,790 crore in the reporting quarter vis-à-vis ₹30,313 crore in the preceding quarter, its stock soared 7.16 per cent (or by ₹16.25) to close at ₹243.20 on the BSE.
Net interest income edged up 4 per cent yoy to ₹14,312 crore. Non-interest income jumped 44 per cent yoy to ₹7,335 crore. It includes ₹908 crore received on the sale of a 5 per cent stake in the National Stock Exchange.
SBI Chairman Arundhati Bhattacharya said proceeds from the stake sale have been put into provisions. “We have created almost ₹1,380 crore of additional provisions this quarter on account of this one-time income.”
The net interest margin declined 16 basis points yoy to 2.83 per cent.
Retail and corporate advances drove growth in the loan book. Gross advances grew 11.41 per cent yoy to ₹14,63,690 crore.
However, quarter-on-quarter, advances were down ₹50,000 crore. About half of this amount was converted into investment in commercial papers and non-convertible debentures.
Deposits increased 10.46 per cent yoy to ₹17,82,371 crore. The low-cost current account, savings account deposits ratio improved from 41.70 per cent as at June-end 2015 to 42.78 per cent.
Gross non-performing assets (GNPAs) jumped 80 per cent yoy to ₹1,01,541 crore. GNPAs increased by ₹3,368 crore during the reporting quarter. The GNPA ratio deteriorated to 6.94 per cent as at June-end 2016 from 4.29 per cent as at June-end 2015.
On NPAs, Bhattacharya said: “We have an NPA trajectory in mind. The trajectory should look much better subsequent to the second quarter. The worst is behind us with the last quarter. But obviously, you know, it is not something that will just get shut off like a tap. Obviously, the denominator (loan growth) will also play a part.”
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