SBI beats estimate, net profit at ₹2,610 cr
State Bank of India’s net profit more than doubled in the December quarter from a year earlier, helped by a one-time gain from the sale of a stake in its life insurance venture, but improvement in asset quality fell short of the lender’s own expectations.
India’s largest lender said Friday that net profit rose to ₹2,610 crore in the fiscal third quarter, up 134% from ₹1,115.34 crore a year ago. The profit was slightly higher than the estimate of ₹2,509.70 crore in a Bloomberg poll of 18 analysts.
The increase was mainly due to a one-time gain of ₹1,755 crore from the sale of a 3.9% stake in SBI Life Insurance Co Ltd.
Provisions against bad loans dropped to ₹7,244.55 crore in the quarter, from ₹7,644 crore a year ago, and ₹7,669.66 crore in the July-September period. SBI also set aside in the quarter ₹1,400 crore against standard assets that are at risk of turning bad.
Asset quality improved a shade with SBI recovering ₹3,994 crore of loans and upgrading ₹2,434 crore more. The improvement fell short of the bank’s own expectations — a fact chairman Arundhati Bhattacharya blamed on the November 8 invalidation of high-value currency notes, which made it tough for cash-dependent borrowers to repay debt. “We were very hopeful of seeing most of the resolutions come in during this quarter. However, demonetisation has actually pushed this by another quarter.”
Gross non-performing assets (NPAs) rose marginally by 2.3% to ₹1.08 lakh crore at the end of the December quarter, from ₹1.06 trillion in the September quarter. On a year-on-year basis, gross NPAs jumped 48.61% from ₹7,2791.73 crore.
Gross NPAs made up 7.23% of total assets at the end of the December quarter, compared to 7.14% in the previous quarter, and 5.1% in the year-ago quarter.
Loans worth ₹10,185 crore slipped into the NPA category, of which, ₹10,069 crore were on the bank’s corporate loan book. Of the corporate loan slippages, 73%, or ₹7,341 crore, were from the bank’s watchlist — consisting of loans at risk of turning bad.