Moneycontrol
Nov 10, 2017 02:23 PM IST | Source: Moneycontrol.com

SBI shares rally 8% as lower slippages improve asset quality though provisions drag Q2 profit

Provisions for non-performing assets were higher by 38 percent QoQ and 118 percent YoY at Rs 16,715.2 crore, the country's largest lender said.

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State Bank of India share price surged as much as 7.77 percent intraday Friday as steep decline in Q2 slippages (compared with previous quarter) improved asset quality, though standalone profit plunged 38 percent on higher provisions.

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

He further said 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, he added.

Lower slippages helped the asset quality improve on sequential basis.

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).

Standalone profit of the bank fell sharply by 38 percent to Rs 1,581.55 crore, dented by higher provisions for bad loan accounts referred for insolvency proceedings at the National Company Law Tribunal (NCLT).

Provisions for non-performing assets were higher by 38 percent QoQ and 118 percent YoY at Rs 16,715.2 crore, the country's largest lender said.

Net interest income grew by 27.3 percent year-on-year to Rs 18,585.9 crore in Q2 despite tepid loan growth.

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 14:06 hours IST, the stock price was quoting at Rs 333.10, up Rs 19.35, or 6.17 percent amid high volumes on the BSE.
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