Country’s largest bank SBI has reported a 7.83 per cent decline in net profit for the quarter ended March, 2014 at Rs 3,041 crore on higher provisioning for bad loans and future wage revision.
State Bank of India (SBI) had reported a net profit of Rs 3,299 crore on standalone basis in the January-March quarter of the previous fiscal. The total income rose to Rs 42,443 crore for the period under review from Rs 36,331 crore in the same period a year ago, SBI said in a statement.Net interest income rose by 16.4 per cent to Rs 12,903 crore.
Provisions for bad loans surged to Rs 5,884 crore, 48.05 per cent higher than Rs 3,974 crore in the year-ago period.The total provisioning for the full year stood at Rs 7,587 crore, 70.06 per cent higher than Rs 4,461 crore in the previous year.SBI Chairperson Arundhuti Bhattacharya said the decline in profit was due to higher provisioning for bad loans and future wage revision.
She said for the first time SBI had decided to adopt some quantitative changes in risk management for improving the asset quality.Regarding NPA control, she said that bank had created certain committees to look at accounts showing stress.The stressed sectors of the bank were engineering, textiles, pharmaceuticals and services, she said.
The bank was also particular in maintaining a healthy SME portfolio as well as restructuring of agri-products besides priority sector lending, she said. SBI would also conduct a professional study on operational risks.Deposits of the bank at the end of March, 2014 stood at Rs 13,94,409 crore, while advances was Rs 12,45,122 crore.
She said that bank was looking at a credit growth of 15-16 per cent for the current fiscal, adding that if needed, it would be reviewed.Going forward, asset quality of the bank was expected to be good, Bhattacharya said. Bhattacharya said that yield on advances and cost of deposits from March, 2013 till March, 2014 had almost remained flat.
Net interest margin declined from 3.34 per cent in March 2013, to 3.17 per cent in March, 2014.On capital adequacy, she said the bank was well capitalised at 12.44 per cent and there was no need for fresh funds at the moment.
Regarding asset quality, she said SBI’s gross NPA rose from Rs 5,1189 crore in March, 2013 to Rs 61,605 crore in March 2014, reflecting a rise of 20.3 per cent.
Net NPA also increased from Rs 21,956 crore in March, 2013 to Rs 31,096 crore as on March 2014, registering a rise of 41.6 per cent.SBI’s gross non performing assets (NPAs) as a percentage of total loan rose to 4.95 per cent during the quarter from 4.75 per cent.
Risk had been considered as a ‘dynamic concept’ and risk modules would be incorporated in all the training modules, Bhattacharya said.All concurrent auditors are to check quality of assets online as well early review of all sanctions of loans so that quality was not compromised, she said.
During the last quarter of 2013-2014, the bank made a recovery of Rs 1,397 crore, upgraded accounts to the tune of Rs 1,519 crore and written off Rs 1,148 crore.
Fresh slippages during the quarter was Rs 13,766 crore leading to a net increase on NPA of Rs 9,702 crore.Bhattacharya said the bank had also dipped into counter-cyclical provisioning to the extent of Rs 750 crore during the year.