State Bank on Friday reported a group net of 1,840.43 crore for September quarter, boosted by the gains from the public offer in its life insurance arm and a very low base when it had a paltry Rs 20.70 crore of profit.
Since the nation's largest lender had merged its five associate banks and Bharatiya Mahila Bank from April this year, the numbers are not comparable.
However, on consolidated basis, the merged entity would have made a loss of Rs 557 crore in the same period last fiscal, as the associate banks had incurred huge losses due to higher slippages after the RBI's asset quality review forcing them to make additional provisions.
On standalone basis, net profit plunged to Rs 1,582 crore from Rs 2,538.32 crore a year ago.
In absolute terms, gross bad loans rose to Rs 1,86,114.60 crore or 9.83 per cent from Rs 1,05,782.96 crore or 7.1 per cent, while net NPAs rose to Rs 97,896.29 crore or 5.43 per cent from Rs 60,013.45 crore or 4.19 per cent.
However, on a sequential basis, gross NPAs and net NPAs improved a bit to 9.97 per cent and 5.97 per cent, respectively. Fresh slippages stood at Rs 9,026 crore in the reporting quarter.
Commenting on the numbers, which was lapped up by the market with an over 6 per cent rally, SBI Chairman Rajnish Kumar said, “this is a very satisfying quarter as far as our performance is concerned. If you look at our operating income, the story is very strong.”
“Our retail franchise is giving us tremendous support in these times and digital offering also remains very strong,” he told reporters on a concall on his maiden earnings presser after assuming office last month.
During the reporting quarter, State Bank of India sold its shares in life insurance business SBI life for Rs 5,436 crore. Domestic net interest margin declined in the quarter to 2.59 per cent from 2.98 per cent a year ago. Net interest income rose a tad to Rs 18,586 crore from Rs 18,119 crore.
On asset quality, the chairman said “we are capable of handling NPAs and we'll emerge stronger. Just wait for a few more quarters and you will see improvements”. The watch list has come down from Rs 24,000 crore to Rs 21,000 crore in the quarter and fresh slippages stood at Rs 9,026 crore.
The slippage ratio declined to 1.85 per cent from 5.38 per cent in the first quarter. The bank upgraded Rs 1,113 crore of loans while recovered Rs 2,210 crore. Total provision rose to Rs 18,418 crore from Rs 14,546 crore.
The bank parked a part of the IPO proceeds from SBI life for accelerated provisioning taking its provision coverage ratio to 65.10 per cent.