SBI net profit triples in 2nd quarter

State Bank of India (SBI), country’s largest lender, reported a more than three-fold increase in its net profit to Rs3,012 crore in the second quarter (July-Sept).

The sharp surge in SBI’s profit came on account of lower provisioning for bad loans and improvement in its asset quality. The profit trebled by the sale of stake in its life insurance subsidiary and better asset quality and management.

“Exceptional items represent net profit of Rs3,190.97 crore on sale of partial investments in SBI Life Insurance Company Ltd. Consequently, the holding of SBI in the subsidiary reduced to 75.9 per cent from 62.1 per cent,” SBI said.

Buoyed by the result, SBI share price was up 282.35. The largest lender also posted an improvement in its asset quality, amidst concerns over fresh weakness in corporate credit quality.

Net profit rose 218 per cent on a yearly basis to Rs3,012 crore in the quarter ended September, according to an exchange filing as well as statement by India’s largest public sector bank. Profit growth though has come on a low base as SBI’s bottom line had taken a hit a year ago as it had to provide for bad loans or NPAs.

Net interest income, or the core income of the lender or for any bank, rose 17 per cent year-on-year to Rs24,600 crore, surpassing the Rs23,075-crore estimate. Net interest margin improved to 3.22 per cent from 3 per cent sequentially. The most soothing factor for SBI was that the asset quality has improved with gross non performing assets falling by Rs6,827.89 crore to Rs1,61,636 crore from June.

Gross slippages declined to Rs8,805 crore from Rs16,212 crore in the previous quarter, by 50 per cent. SBI chairman Rajnish Kumar, however, warned that a large stressed non-bank lender has not yet fallen into the NPA category and could add to stressed assets in subsequent quarters. He did not name the lender.

Indo-Asian News Service