Moneycontrol
Nov 10, 2017 05:45 PM IST | Source: Moneycontrol.com

SBI Q2 profit falls 38% on higher provisions; asset quality improves on lower slippages

Chairman Rajnish Kumar said gross slippages for the quarter stood at Rs 10,627 crore (including fresh slippages of Rs 9,026 crore). That was sharply lower compared with Rs 30,059 crore slippages reported in June quarter.

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Country's largest lender State Bank of India has reported a sharp degrowth of 38 percent year-on-year in standalone profit for July-September quarter, dented by higher provisions for bad loan accounts referred for insolvency proceedings at the National Company Law Tribunal (NCLT).

Profit was supported by higher other income, operating income, net interest income and tax write back.

Profit for the quarter, which also missed analyst estimates, declined to Rs 1,581.55 crore, from Rs 2,538.32 crore in year-ago. Sequential fall in profit was 21 percent, the bank said.

Net interest income, the difference between interest earned and interest expended, grew by 27.3 percent year-on-year to Rs 18,585.9 crore in Q2, which was above estimates.

Profit was estimated at Rs 2,507.6 crore and net interest income at Rs 19,088.7 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Asset quality improved on sequential basis post decline in slippages. Gross non-performing assets (as a percentage of gross advances) were lower at 9.83 percent in Q2 against 9.97 percent in Q1 and net NPAs (as a percentage of net advances) were also lower at 5.43 percent against 5.97 percent QoQ.

Gross NPAs in absolute terms were also lower by 1 percent at Rs 1,86,115 crore (from Rs 1,88,068 crore in Q1FY18) and net NPAs fell 9 percent at Rs 97,896 crore (Rs 1,07,760 crore).

While addressing press conference post earnings, SBI Chairman, Rajnish Kumar said gross slippages for the quarter stood at Rs 10,627 crore (including fresh slippages of Rs 9,026 crore). That was sharply lower compared with Rs 30,059 crore slippages reported in June quarter.

Fresh slippages in Q2 were at Rs 9,026 crore against Rs 26,249 crore in previous quarter. Hence, annualised slippage ratio declined to 1.85 percent versus 5.38 percent QoQ.

"We have made more than 50 percent provision for both of RBI's NCLT lists, including Rs 3,835 crore provided towards first list of NCLT accounts," Kumar said, adding the watchlist at the end of September quarter was down to Rs 21,000 crore, from Rs 24,000 crore as of June quarter 2017.

Slippages from retail were at Rs 4,448 crore for the quarter.

Provisions and contingencies for the quarter stood at Rs 19,137.4 crore, which were sharply higher by 114.3 percent quarter-on-quarter and 142.3 percent year-on-year.

Provisions for non-performing assets (including above) were higher by 38 percent QoQ and 118 percent YoY at Rs 16,715.2 crore, the SBI said.

Other income (non-interest income) grew by 28 percent to Rs 10,579.91 crore and operating profit jumped 30 percent to Rs 14,563 crore for quarter ended September 2017.

"Operating profit excluding exceptional item increased 11.40 percent," Kumar said. Exceptional item of Rs 5,436.17 crore was the stake sale in SBI Life towards end of September.

Standalone tax writeback for the quarter was at Rs 719.84 crore against tax expenses of Rs 789.3 crore in year-ago.

SBI said credit growth continued to be muted in Q2. Advances during the quarter increased 1 percent to Rs 18.92 lakh crore while deposits grew by 10.3 percent to Rs 26.23 lakh crore YoY.

At 12:56 hours IST, the stock price was quoting at Rs 321.40, up Rs 7.65, or 2.44 percent on the BSE.
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