NPA surge pushes SBI net down
State Bank of India’s (SBI) bottom line came under pressure in the second quarter ended September 2016 on a sharp rise in provisions for bad loans and subdued growth in net interest income (NII), which is earning from loans minus expenses on deposit.
The country’s largest lender reported a 34.6 per cent fall in its net profit to ~2,538 crore from ~3,879 crore in the same period a year ago. Sequentially, its net profit rose marginally from ~2,520 crore in the first quarter of 2016-17.
A tidy rise in other income — treasury revenue, fees and service tax refund of ~796 crore — supported its profits. Other income rose by 35.9 per cent to ~8,424 crore during the quarter from ~6,197 crore in Q2FY16. Despite this, the net profit was short of Bloomberg consensus estimate of ~2,585 crore.
Reflecting concerns over slippages and credit costs, SBI’s share price fell by three per cent to ~272 at close of trading on the BSE on Friday.
The NII was flat (1.3 per cent rise) at ~14,437 crore, from ~14,252 crore in Q2FY16. The lower credit offtake and reduction in lending rate impacted the bank’s interest income, SBI Chairman Arundhati Bhattacharya said.
INDIAN OVERSEAS BANK NET LOSS RISES TO ~765 CRORE
Net loss of Indian Overseas Bank rose to ~765 crore for the quarter ended September, against a net loss of ~551 crore during the same quarter last year.
BANK OF BARODA PROFIT SURGES FOUR-FOLD
Bank of Baroda on Friday posted net profit of ~552 crore for the quarter ended September, against a net profit of ~124.4 crore during the same quarter last year.
ANDHRA BANK NET DOWN AT ~51.4 CRORE
Andhra Bank on Friday reported 80 per cent decline in net profit at ~51.4 crore for the quarter ended September. Total income increased to ~5,042 crore.
Provisions for non-performing assets (NPAs) rose to ~7,669 crore from ~3,841 crore in the same quarter a year ago. In the first quarter of 201617, SBI had made provisions of ~6,339 crore for NPAs.
The bank’s provision coverage ratio improved to 62.12 per cent in September 2016 from 61.57 per cent in June 2016.
Its pool of bad loans grew sharply in 12 months to ~1,05,782 crore from ~56,834 crore a year ago. Sequentially too, keeping a check on asset quality seemed tough for the bank, given gross NPA stood at ~1,01,541 crore at end of June 2016. Consequently, the bank’s gross NPA ratio came in at 7.14 per cent in Q2FY17, the highest in at least six quarters. This ratio stood at 4.15 per cent in the year-ago period and 6.9 per cent in the June 2016 quarter, according to Motilal Oswal Securities data.
Slippages into the bad loan category were about ~10,341 crore during the second quarter of 2016-17 from ~5,875 crore in the same period a year ago.
Net interest margin, a profitability indicator, for the domestic operations at 3.05 per cent in Q2 was lower than 3.32 in the year-ago quarter and 3.09 per cent in Q1 - again the lowest in at least six quarters.
Positively, the bank was able to improve its cost-to-income ratio in the first half of FY17 to 49.95 per cent, compared to 50.43 per cent in the year-ago period. The outlook for resolution of stressed accounts was improving and recent amendments to rules for restructuring schemes would aid recoveries, Bhattacharya said.