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Friday, November 9, 2012

SBI Q2 net rises 30% on lower provisioning

State Bank of India reported a 30 per cent jump in second quarter net profit at Rs 3,658 crore helped by lower loan loss provisions.

Write-back of provisions worth Rs 260 crore, which was made for investment depreciation, coupled with recoveries from bad loans also boosted profitability.

“We had already made more than enough provisioning in the first quarter. So, to that extent the provisioning has come down in the second quarter,” Pratip Chaudhuri, SBI Chairman said.

The country’s largest lender had reported a net profit of Rs 2,810 crore in the July-September quarter last year.

Provisions to cover potential bad loans decreased 37 per cent to Rs 1,837 from Rs 2,921 crore, a year earlier.

Net Interest Income, the difference between interest earned on loans and interest given on deposits, increased a mere 4.69 per cent to Rs 10,974 crore from Rs 10,482 crore.

Explaining the rationale for the low net interest income, Chaudhuri said, “Loan growth has not been good in the first and the second quarters.”

The overall year-on-year credit growth was 18 per cent in the quarter. Term loans and project loans have been hit badly, he added.

Asset Quality

The ratio of gross non-performing assets (NPAs) to gross advances increased 96 basis points to 5.15 per cent or to Rs 49,202 crore. In net terms, the ratio increased to 2.44 per cent from 2.04 per cent.

In the second quarter, SBI saw a net addition of Rs 2,000 crore to its NPA portfolio.

As at September-end, the bank had restructured assets portfolio worth Rs 40,454 crore. “About 19 per cent of the restructured assets have slipped into NPA,” Chaudhuri said.


The bank expects that deposit growth will be slow for the rest of the year. However, it expects the credit growth to be in the 16-18 per cent range primarily driven by home loans growth.

The bank has accounts worth Rs 4,000 crore coming up for restructuring in the current quarter, Soundara Kumar, Deputy Managing Director, Stressed Assets, said.

Shares of SBI ended at Rs 2,156.35, down 3.89 per cent, on the Bombay Stock Exchange.


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