Dragged down by lower interest income and higher provisioning for bad debts, State Bank of India posted its first drop in quarterly net profit in two years.
The country’s largest lender saw its net profit fall 19 per cent to Rs 3,299 crore in the fourth quarter ended March 31, 2013.
On a sequential basis, profits declined by three per cent from Rs 3,396 crore in October-December 2012.
However, for the full year ended March 31, 2013, net profit grew by 17 per cent to Rs 17,916 crore (Rs 15,343 crore), while operating profit remained almost flat at Rs 40,922 crore (Rs 40,713 crore)
For 2012-13, the bank’s board has declared a dividend of Rs 41.50 a share of face value Rs 10 each. The bank’s shares closed at Rs 2,176.20, down by 7.96 per cent, on the BSE on Thursday.
Loan quality
“Pressure on asset quality continued even while there was a slight decline in the number of new assets falling into the sub-standard category,” said Pratip Chaudhuri, Chairman, SBI, while announcing the bank’s performance during the quarter here on Thursday.
Gross non-performing assets (as a percentage of advances) in the quarter increased to 4.75 per cent (4.44 per cent), while net NPAs increased to 2.10 per cent (1.82 per cent). On a sequential basis, however, there was an improvement in both gross and net NPA levels.
Provisioning for NPAs shot up 40 per cent on a year-on-year basis.
SBI witnessed fresh slippages of Rs 5,868 crore during the quarter.
According to Saday Sinha, banking analyst at Kotak Securities, the bank’s fourth quarter results were disappointing on the operational front.
“Drop in net income was on the back of higher operating expenses as well as elevated NPA provisions.
“This number would have been even worse had SBI not reported lower tax for the quarter. Though gross and net NPAs declined on a quarter-on-quarter basis, asset quality pain persists,” he said.
Margins
Net interest margin declined to 3.34 per cent (3.85 per cent). Domestic NIM stood at 3.66 per cent (4.17 per cent) while the international NIM was at 1.50 per cent (1.67 per cent).
While the bank is hopeful of holding on to a domestic NIM of 3.66 per cent, margins from overseas business might be under pressure due to excess liquidity, which is exerting pressure on yields. Cautious on corporate lending: Page 14