SBI net slips 38 per cent on higher provisioning

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The SBI reported a second-quarter (Q2) profit compared with a loss year ago, and a sequential improvement in its bad-loan ratio, sending its shares higher.

The state-owned lender reported a net profit of Rs 1,581.5 crore in the second quarter against Rs 2,538.3 crore in the corresponding quarter previous year. SBI Chairman Rajnish Kumar, who was named to his position just last month, has said tackling of bad loans would be a key priority, although the bank will not shy away from growth opportunities.

Gross bad loans as a percentage of total loans was 12.62 percent at end-September compared with 13.05 percent a quarter earlier, and 13.45 percent a year earlier.

The company had posted a net profit of Rs22.21 crore for the corresponding period of the previous fiscal, Novartis India said in a filing to the BSE.

The net profit profit stood at Rs 20.70 crore during the same quarter of the last financial year.

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Income from non core business helped the bank making higher profits despite higher provisions and call fall in net interest margin to 2.37 per cent from 2.67 per cent a year back.

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).

The Rs. 8,400-crore SBI Life Insurance's IPO was oversubscribed 3.58 times during the offer period from September 20-22. Hence, annualised slippage ratio declined to 1.85 percent versus 5.38 percent QoQ, he added. The sluggish loan growth was due to the corporates loan book shrinking.

Speaking to media, he said the watchlist at the end of September quarter was down to Rs 21,000 crore from Rs 24,000 crore as of the June quarter.

Almost half of these came from the agriculture and small and medium enterprises accounts. In an analyst call, Kumar said, "I don't understand you analysts". Similarly, the net NPAs rose to 5.43 per cent from 4.19 per cent.

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