Net profit during the quarter fell to R3,299 crore against R4,050 crore in the same quarter last year, a fall of 18.5%. Operating profit too fell by 19% from a year ago to R7,761 crore. Profit before tax saw an even steeper fall of 44% year-on-year to R3579 crore.
The banks profitability was hit both by higher provisioning and a fall in net interest income in the January-March quarter. Net interest income fell 4.4% year-on-year to R11078 crore.
Pressures faced by SBI are similar to other public sector lenders where rising provisions and slow growth in the core banking business led to a fall in profits. For instance, Bank of Baroda saw a 32% fall in net profit as provisions for bad loans surged 126%. Bank of India saw a 21% drop in profits due to an 18.5% rise in provisions. For Punjab National Bank, a near 12% rise in bad loan provisions lead to a 21% fall in net profit.
Pressure on asset quality continues. New assets falling into the sub-standard category perhaps got arrested. But the provisioning requirement in respect of the accounts that are already in sub-standard or doubtful category that increased substantially, said SBI chairman Pratip Chaudhuri.
However, SBI was partially successful in bringing down its non-performing asset ratios during the quarter due to a pick-up in recoveries and upgrades.
Gross NPAs fell to 4.75% of the total book versus 5.3% in the previous quarter and net NPAs also fell to 2.10% versus 2.59% in Q3.
SBI recovered Rs 1,132 crore through cash recoveries in Q4 and also saw loans worth Rs 4,586 crore being upgraded to standard assets from non-performing assets.
Broader indicators of asset quality which include fresh slippages and restructuring of accounts didnt provide much comfort as restructuring surged to Rs 8,669 crore versus Rs 2,838 crore in the third quarter. A large chunk of this was on account of SBIs Rs 3,500 crore exposure to Suzlon. The pace of fresh slippages eased compared to the previous quarter but still stood at a relatively high Rs 5,688 crore in Q4.
These are all genuine cases of restructuring and there is no ever-greening of the portfolio, said Diwakar Gupta, CFO and MD.
While the bank continued to grapple with asset quality pressures, the performance on loan and deposit growth was strong. Gross advances for the bank rose 20.7% y-o-y to Rs 10,78,557 crore, the bank stated. Of this, the large corporate portfolio stood at Rs 1,75,831 crore, up 40.28% from a year ago. The banks mid-corporate segment too showed good growth, with the portfolio rising 18.15% from a year ago to Rs 2,04,853 crore.
Retail loans grew by nearly 15% y-o-y to Rs 2,09,694 crore, the bank said in a statement. Within this segment, home loans grew 16.3% while auto loans were up 35.5% y-o-y.
Deposits grew above system average at 15% to Rs 12.02 lakh crore. The bank also saw an over-15% growth in savings deposits, a segment where the industry has struggled for growth due to high and persistent inflation in the economy.
The banks cumulative net interest margin (NIM) fell 6 basis to 3.34%. Of this, the banks domestic NIM stood at 3.66% as on March 31, lower than 3.72% in the quarter ended December 31.
Pratip Chaudhuri, chairman, explained that the fall in domestic NIM was largely due to accounting of pensions.
In the previous year, the pension money was deployed into lending operations of the bank, giving higher NIM. This year we have moved the pension money to the pension fund, Chaudhuri told reporters in Kolkata, after announcing the banks results.
While the earnings were a mixed bag, the stock sold off steeply ending nearly 8% lower at Rs 2,176.20 on the Bombay Stock Exchange.