SBI profit declines 37% to ₹1,581.55 cr in Sept quarter

MUMBAI: State Bank of India reported lower-than-expected fiscal second quarter profits on Friday after the lender set aside more money to cover the risk of defaults on non-performing assets. However, a deceleration in new additions to bad loans and robust operating profit growth cheered investors who drove up its shares 6%.

India’s largest lender said its net profit fell 37% to ₹1,581.55 crore compared to ₹2,538.32 crore a year ago. Fifteen analysts polled by Bloomberg had forecast a profit of ₹2,628.50 crore.

The results are not comparable from the year-ago period because SBI merged its six associate banks with effect from 1 April. On a like-to-like basis (including last year’s numbers for associates), SBI had made a loss of ₹557 crore a year ago.

Again, on a like-to-like basis, pre-provisioning operating profit (after adjusting for onetime gain of ₹5,440 crore from the sale of its stake in its life insurance subsidiary SBI Life) was up 11.4% from a year ago indicating some traction in its operations.

SBI shares rose 6.2% to ₹333.20 at the close of trading on a day the benchmark Sensex rose 0.19% to 33,314 points.

The lender reported fresh addition to gross non-performing assets of ₹9,026 crore compared to ₹26,249 crore in the quarter ending June. Of these slippages, around ₹4,538 crore was from the corporate sector and 81% of this came from its so-called watchlist of stressed accounts. The list at the end of June quarter stood at ₹21,288 crore.

The bank wrote off ₹9,258 crore of loans during the September quarter. That pushed up the total number of written-off accounts for the first half of the fiscal to ₹22,434 crore compared to ₹12,461 crore a year ago.

At the end of September, gross non-performing loans stood at ₹1.86 lakh crore, as compared to ₹1.88 lakh crore three months earlier.

Its gross bad loan ratio stood at 9.83% compared to 9.97% at the end of June.

The “sharp fall in fresh slippages has positively surprised us. (We) were projecting slippages of ₹15,500 crore for the quarter. Further, the new management chose to strengthen the balance sheet over profitability by increasing the provision coverage ratio,” said Ashutosh Mishra, senior research analyst, Reliance Securities.

Despite lower addition to bad loans, provisions and contingencies surged 142.3% to ₹19,137.43 crore from ₹7,896.72 crore in the last fiscal year.