India's largest lender State Bank of India's (SBI) on Friday reported a forecast beating 30% year-on-year jump in its second quarter (July-September) net profit at around Rs 3,660 crore, aided by lower provisions against bad assets. However, the net interest income (NII) or the difference between interest earned and paid out, fell short of market expectation and rose 5.3% to Rs 10,973 crore.
A brokerage poll by CNBC Awaaz had expected the second quarter net profit at Rs 3,615.1 crore, up 29% y-o-y and NII more than 12% to Rs 11,680 crore on standalone basis.
The bank expanded its standalone loan book by more than 17% y-o-y to Rs 9.27 lakh crore surpassing RBI's (revised) projected industry credit growth at 16% in 2012-13. Net interest margin (NIM) rose by 20 basis points quarter-on-quarter to 3.77%.
Gross non-performing asset (NPA) ratio increased to 5.15% as against 4.99% in Q1, FY13 and 4.19% in Q2, FY12. Net NPA ratio was at 2.44% compared with 2.22% in the previous quarter. During the quarter, total gross NPAs stood at Rs 49,202 crore while net NPAs at Rs 22,614 crore.
Provisions against non-performing assets declined nearly 37% y-o-y to Rs 1,837 crore in the quarter.
"Lower provisions added to the profit margin. It came on the back of strong recovery and ugrades. Together, those stood at Rs 4,500 crore compared with Rs 3,000 crore in the April-June quarter," Vaibhav Agrawal, vice president – Research at Angel Broking told moneycontrol.com.
However, fresh slippages and restructured loans increased during the three month period. Fresh slippages remained at an elevated level at Rs 8,495 crore. In the last four trailing quarters, the average level of slippages was around Rs 8,000 crore. In Q2, analysts were expecting it to come down in the range of 5000-6000 level.
On the other hand, the public sector lender restructured loans worth Rs 4,694 crore as against Rs 564 crore in the previous quarter.
When a borrower fails to repay his loans and asks for relaxation of original terms and conditions, it is called restructuring of loans. Slippages come up when the status of standard performing loans slips into non-performing category.
"During the quarter and half year ended September 30, 2012; the bank has made additional provisions of Rs 115 crore (net) and Rs 1,010 crore respectively against (i) an account pending restructuring and (ii) against certain non-performing domestic advances," SBI said in a statement sent to the stock exchanges.
Provision coverage ratio was 62.78% as on September 30 and capital adequacy ratio contracted to 12.63% in Q2, from 13.14% recorded in Q1.SBI grew its deposits by about 16% y-o-y to Rs 11.34 lakh crore.
SBI shares tanked 4% on Friday to close the day's trading at Rs 2155 on the NSE. Traders pressed the panic button over SBI's rising slippages.