State Bank of India posted second quarter net profit at Rs 3100 crore versus a CNBC-TV18 poll of Rs 3096 crore. Gross NPA fell marginally to 4.89 percent versus 4.90 percent quarter-on-quarter, while net NPA stood at 2.73 percent versus 2.66 percent Q-o-Q.
Vaibhav Agrawal, VP - research - banking, Angel Broking says it is great that the bank managed to restrict bad loans at 4.89 percent and its asset quality numbers look better. However, he says bottomline is below what he was expecting. Broadly, the bank reported good set of numbers, he adds.
Suruchi Jain, equity research analyst, Morningstar India too concurs with Agarwal on SBI's numbers. According to her, profit after tax is up 30 percent, NPA is flat and most slippages on infrastructure book has already happened and hence things should improve from hereon. Fewer slippages are also a positive for SBI especially since underwriting was a concern and it appears that the management is making efforts on that front, she adds.
Below is the verbatim transcript of Suruchi Jain and Vaibhav Agrawal's interview with Latha Venkatesh and Sumaira Abidi on CNBC-TV18.
Latha: What are your first thoughts, bad loans restricted to 4.89 percent versus 4.9 percent among other things?
Agrawal: The asset quality numbers are looking better than what we were expecting. We were expecting some increase in the net NPAs but they have provided more. So, bottomline is a little bit below what we were anticipating. However, to the extent that it has helped to keep net NPAs in check broadly it looks like a good set of numbers.
Latha: What do you make of the profit and the NII growth that stands at quite a muted 8 percent?
Agrawal: On the NII in general even at the balance sheet level the loan growth, etc for State Bank of India (SBI) has been quite muted. This quarter they would also have had a lot of liquidity coming in which deployment would have been a little bit of an issue. So, the NII is a little bit below estimate and the absolute growth number is also on the lower side. However, the bottomline broadly it is inline.
Latha: Profit up 30 percent, NPLs flat whether you look at the aggregate number or at the percentage it is flat. What are your first thoughts?
Jain: I think that is a very good set of numbers. PAT is up 30 percent and NPLs are flat. Most of the slippages have happened especially on the infrastructure book and from hereon things should start improving.
Latha: What are your first thoughts, fresh slippages are much fewer?
Jain: Yes, that is a very big positive for SBI. Given that under writing has been a concern that we have had with the bank in the past, the new management in place it seems like they are making efforts on improving on that front. Even though provisions and NPAs and NPLs have all risen in the past, if they go down in the coming quarters we will definitely be positive on the overall growth outlook on SBI.
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