SBI Q1: Rise in NPAs disappointing, says ICICI Direct

In an interview to CNBC-TV18 Kajal Gandhi of ICICI Direct shared her reading of State Bank of India’s first quarter performance.

State run lender reported a 137% jump in net profit at Rs 3,752 crore for the first quarter ended June 30, 2012. It had a net profit of Rs 1,583 crore in the April-June quarter of 2011-12 fiscal. Net non-performing assets (NPAs) rose to 2.22% of total loan book at the end of June, against 1.61% a year ago. Total income increased 16.89% in the quarter to Rs 32,415 crore, from Rs 27,732 crore in the same period a year ago. Below is the edited transcript of Gandhi’s interview with CNBC-TV18 Q: You told us Rs 42,000 crore is what you are prepared for, it has come in at Rs 47,000 crore the gross NPLs, what is your reaction? A: Our expectation was around Rs 42,000 crore, but the number has come in at Rs 47,000 crore, which is quite very disappointing. Provisions have come down, but we believe that there must be some investment depreciation write back. We have seen MTM write back for most other PSU banks. That can be reasons for the decline because NPA provision has been maintained on a quarter-on-quarter (QoQ) basis. Overall profitability has remained stable, but NPA additions are a bit disappointing. Q: Anything you want to comment in terms of the NII number that has come in at Rs 11,000 crore? A: It is slightly lower than what we were estimating. A slight contraction in margin may have happened or yields may have gone down a bit. Q: At the moment, what is your opinion on the stock? A: We had a buy rating on this stock but post results, the details will have to be reviewed.