Moneycontrol BureauBeating analyst estimates, country’s largest lender State Bank of India’s net profit for the third quarter jumped 134 percent to Rs 2,610 crore from Rs 1,115.34 crore in the year-ago quarter.
Ravikant Bhat, Research Analyst at IDBI Capital, said, “Profit is ahead of expectations. Overall numbers are good. Loan growth is positive and expectedly there is big difference between deposit and loan growth…Clearly, slippages in the first and second quarter had been on the elevated side. So, the containment of slippages to Rs 10,000 crore is a good number for the bank.”
Fresh slippages into NPAs (non-performing assets) marginally declined to Rs 10,185 crore from the previous quarter of Rs 10,341 crore.
Bhat says he will look at the watchlist (potential bad loans expected) and its conversion into NPAs from the bank.
Though a small number, the bank made total upgrades of Rs 1059 crore as compared to Rs 206 crore in the previous quarter. The recoveries, however, were on the lower side of Rs 1003 crore as compared to Rs 1344 crore in the September quarter.
Overall, asset quality slightly weakened with gross non-performing assets at 7.23 percent against 7.14 percent and net NPAs at 4.24 percent against 4.19 percent on sequential basis.
Nilesh Parikh, Associate Director at Edelweiss Securities, said: “The numbers are pretty stable going by the past. The recovery and upgrade numbers seem to be slightly lower but given the environment, they seem to have done quite well and on expected lines. We continue to maintain a ‘Buy’, asset quality seems to be stabilising and the slippages seem to be tending on the guidance given.”
SBI’s net interest income (difference between interest earned on loans and paid on deposits) grew by 7.7 percent to Rs 14,754.54 crore from Rs 13,697.01 crore YoY.
“The bank’s exposure to the power sector needs to be seen…Coming closer to the end of the second quarter, it needs to be seen how soon they start seeing the recoveries from here on…There is still a lot of catch-up for state-owned banks on the return-on-assets front. Our confidence remains on the new age private banks,” Parikh added.
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