State Bank of India Q4 profit down 8 pct to Rs 3,041 cr; beats estimates, cheers investors

Written by PTI | New Delhi | Updated: May 24 2014, 00:43am hrs
State bank of IndiaSBI shares were trading 3.5 percent up in a Mumbai market that gained 0.7 percent. (Reuters)
Country's largest bank SBI today reported 8 per cent decline in net profit at Rs 3,041 crore for the fourth quarter ended March 31, 2014 on account of higher provisioning against bad loans.

State Bank of India (SBI) had a net profit of Rs 3,299 crore on standalone basis in the January-March quarter of the previous fiscal.

The bank's total income rose to Rs 42,443 crore in Q4, 2013-14, from Rs 36,331 crore in the year ago period, SBI said in a statement.

At the same time, the net interest income of the bank rose by 16.4 per cent to Rs 12,903 crore, from Rs 11,591 crore in the fourth quarter of the last fiscal.

Provisions against bad loans increased significantly in Q4 to Rs 5,884 crore from Rs 3,974 crore in the year-ago period.

The 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 in the year ago period.

The net NPA also increased to 2.57 per cent as compared to 2.10 per cent in the March 31, 2013.

The gross NPA, which represents portion of bad loans, stood at Rs 61,605 crore at the end of March, up from Rs 51,189 crore in the year ago period.

For full fiscal (2013-14), the bank reported a 23 per cent decline in net profit at Rs 10,891 crore compared to Rs 14,105 crore in the previous fiscal.

The total income of the bank rose to Rs 1,36,351 crore, from Rs 1,19,655 crore in 2012-13.

It declared a final dividend of Rs 30 per shares or 300 per cent for 2013-14.

The SBI scrip was down 2.79 per cent at Rs 2,582 in the afternoon trade on the BSE.

On a consolidated basis, SBI's net profit declined by 21 per cent to Rs 14,174 crore during the 2013-14 as compared to Rs 17,916 crore in the year ago period.

However, operating profit on consolidated basis increased by 2.87 per cent to Rs 42,097 crore, as compared to Rs 40,922 crore in the previous fiscal.

Net Interest Margin (NIM) of the bank stood at 3.49 per cent at the end of March 2014.

Capital Adequacy Ratio improved to 12.44 per cent with Tier I capital at 9.72 per cent and Tier II at 2.72 per cent at the end of 2013-14.

Total business - deposits and advances - of the bank has increased by Rs 3,58,234 crore to Rs 26,39,531 crore, from Rs 22,81,297 crore in 2012-13.

The total number of branches have increased to 15,869 with 1,053 branches opened during the year.

Net profit of five associate banks also declined to Rs 2,777 crore during the fiscal ended March 2014, from Rs 3,678 crore in the year ago period, the statement said.

HIGHLIGHTS

* Q4 net profit down 8 pct to $519.8 mln, ahead of estimates

* Bad loans fall sequentially, shares surge nearly 10 pct

* Indian banks betting on new govt to drive economy recovery

Drop in bad loans cheers State Bank of India investors

(Reuters) State Bank of India (SBI) , the nation's biggest lender, reported a drop in bad loans and quarterly net profit that beat forecasts, sending its shares to their highest level in three years.

Net profit for SBI, which accounts for about a quarter of India's loans and deposits, fell about 8 percent from a year earlier to 30.41 billion rupees ($519.8 million) for its fiscal fourth quarter to March 31, but was higher than 28.03 billion rupees estimated by analysts.

Lenders in India are betting a new government set to take over next week will help revive an economy facing its worst slowdown since the 1980s, spurring loan growth and checking a rise in bad loans.

India's economic growth has almost halved to below 5 percent in the past two years on weak investment and subdued consumer demand. Investors hope the new government led by Narendra Modi, who is seen as a pro-business leader, will speed up reforms and give faster clearance to big projects.

"We are all optimistic about the new government," SBI Chairwoman Arundhati Bhattacharya said at a news conference in the eastern city of Kolkata.

"We should grow as per the economy," she said. "Let us see how the economy behaves. The credit growth will come with a lag."

SBI, which is about 58 percent owned by the Indian government, this year pledged to increase scrutiny of bad loans by doing regular reviews and using new technology. It said gross non-performing loans as a percentage of total loans fell 78 basis points sequentially to 4.95 percent in the March quarter.

Manish Ostwal, a banking analyst at Mumbai brokerage K.R. Choksey Shares and Securities, said the reduction in non-performing loans was a "big achievement".

"These numbers look sustainable," Ostwal added.

SBI's net interest income rose 16.5 percent from a year earlier, while its domestic net interest margin was stable at 3.49 percent, the bank said.

Operating profit of 106.28 billion rupees in the March quarter was the bank's highest-ever, Chief Financial officer R.K. Saraf said.

Indian banks including SBI are expected to tap markets to raise funds to meet capital rules and shore up their battered balance sheets. An external central bank panel said this month that state lenders would need up to $98 billion in tier 1, or core capital by March 2018.

Bhattacharya said SBI would discuss with regulators and the Indian government about a possible share sale.

SBI saw a tepid response from foreign investors for a $1.28 billion share sale in January, largely because of concerns about its asset quality and earnings growth in a slowing economy.

Shares in SBI, valued at more than $32 billion, closed 9.6 percent higher, after hitting their highest level since May 2011. The stock has surged almost 56 percent this year, while the banking sector index has risen more than a third on hopes of a recovery in the fortunes of the sector.

($1 = 58.5050 Indian rupees)

PERFORMANCE HIGHLIGHTS Q4FY14

Operating Profit increased by 36.95% YOY from Rs.7,761 crores in Q4FY13 to Rs.10,628 crores.

Net Interest Income increased by 16.47% YOY from Rs 11,078 crores in Q4FY13, to Rs.12,903 crores.

Non Interest Income increased by 18.73% from Rs 5,547 crores in Q4FY13, to Rs.6,586 crores.

Operating expenses have remained flat at Rs.8,861 crores in Q4FY14.

Net Profit declined to Rs 3,041 crores from Rs 3,299 crores in Q4FY13.

Improvement in Asset Quality:

Gross NPA declined by 78 bps sequentially from 5.73% in Q3FY14 to 4.95% in Q4FY14

Net NPA declined by by 67 bps sequentially from 3.24% in Q3FY14 to 2.57% in Q4FY14.

Fresh slippages lower at Rs.7,947 crores in Q4 FY 14 as against Rs. 11,438 crores in Q3FY14.

Healthy CASA Ratio at 44.43%, sequentially up by 54 bps.

Domestic NIM stable at 3.49%.

FY14

Total business of the bank has increased by Rs 3,58,234 crores from Rs 22,81,297 crores in FY13 to Rs 26,39,531 crores in FY14.

Operating Profit increased to Rs 32,109 cr from Rs 31,082 crores in FY13, an increase of 3.31%.

Net Interest Income increased to Rs 49,282 crores from Rs 44,329 crores in FY13, an increase of 11.17%.

Non Interest Income increased to Rs 18,553 crores from Rs 16,037 crores in FY13, an increase of 15.69%.

Net Profit declined to Rs 10,891 crores from Rs 14,105 crores in FY13.

Capital Adequacy Ratio improved to 12.44% with Tier I at 9.72% and Tier II at 2.72%.

Gross NPA + Restructured Standard Assets Ratio stands at 8.41%.

Total number of branches have increased to 15,869 with 1,053 branches opened during the year.

Total number of ATMs for SBI Group stands at 51,491 including 43,515 ATMs of SBI alone.

Total number of customers stands at 21.92 crores.

CONSOLIDATED RESULTS

FY14 OVER FY13

Operating Profit increased from Rs.40,922 crores in FY13 to Rs.42,097 crores in FY14 ( 2.87% YoY growth ).

Net Profit (after minority interest) decreased from Rs.17,916 crores in FY13 to Rs.14,174 crs in FY14 (-20.89% YOY growth ).

Earning per Share declined by 23.54% from Rs.267 in FY13 to Rs.204 in FY14.

SBI STAND ALONE : PROFITABILITY

FY14 OVER FY13

Total Interest Income increased from Rs 1,19,656 crores in FY13 to Rs 1,36,351 crores in FY14 (13.95%YOY growth).

Interest Income on Advances increased from Rs.90,537 crores in FY13 to Rs. 1,02,484crores in FY14 (13.20%YOY growth).

Interest Income on Resource Operations increased from Rs.27,744 crores in FY13 to Rs.32,351 crores in FY14 (16.61%YOY growth).

Total Interest Expenses increased from Rs.75,326 crores in FY13 to Rs.87,069 crores in FY14 (15.59 %YOY growth).

Interest Expenses on Deposits increased from Rs.67,465 crores in FY13 to Rs. 77,886 crores in FY14 (15.45%YOY growth).

Operating Expenses increased from Rs. 29,284 crores in FY13 to Rs. 35,726crores in FY14 (22%YOY growth).

Staff Expenses increased from Rs. 18,381 crores in FY13 to Rs. 22,504 crores in FY14 (22.43%YOY growth).

Q4FY14 OVER Q4FY13

Interest Income on Advances increased from Rs.23,064 crores in Q4FY13 to Rs.26, 949 crores in Q4FY14 (16.84%YOY growth).

Interest Income on Resources Operations increased from Rs7,201 crores in Q4FY13 to Rs. 8,327crores in Q4FY14 (15.63%YOY growth).

Interest paid on deposits increased from Rs.17,417 crores in Q4FY13 to Rs. -20,411crores in Q4FY14 (17.19%YOY growth).

Non-Interest Income increased from Rs. 5,547 crores in Q4FY13 to Rs. 6,586 crores in Q4FY14 (18.73%YOY growth).

Staff Expenses declined from Rs. 5,612 crores in Q4FY13 to Rs. 5,279 crores in Q4FY14 (-5.94%YOY growth).

Operating Profit is at Rs.10,628 crores.

DEPOSITS

Deposits of the Bank increased from Rs 12,02,740 crores in Mar 13 to Rs. 13, 94,409 crores in Mar 14, a growth of 15.94%.

Savings Bank Deposits increased from Rs. 4,14,907 crores in Mar 13 to Rs. 4,69,262 crores in Mar 14 (13.10% YOY growth).

ADVANCES

Gross Advances increased from Rs 10,78,557 crores in Mar 13 to Rs 12,45,122 crores in Mar 14 (15.44% YOY growth).

Credit Deposit Ratio (Domestic) declined by 172 bps from 82.42% in Mar 13 to 80.70%in Mar 14.

Large Corporate Advances increased from Rs 1,75,831 crores in Mar 13 to Rs 2,42,719 crores in Mar 14 (38.04% YOY growth).

Mid-Corporate Advances increased from Rs .2,04,853 crores in Mar 13 to Rs.2,28,384 crores in Mar 14 (11.49% YOY growth).

Retail Advances increased from Rs 2,09,694 crores in Mar 13 to

Rs.2,37,667 crores in Mar 14 (13.34% YOY growth).

Home loans increased from Rs 1,19,467 crores in Mar 13 to Rs 1,40,738 crores in Mar 14 (17.80% YOY growth).

Auto Loans increased by 12.60% YOY from Rs. 24,800 crores to Rs. 27,925 crores and Education Loans increased by 7.19% YOY from Rs. 13,751 crores to Rs.14,740 crores.

SME Advances decreased from Rs. 1,84,128 crores in Mar 13 to Rs. 1,79,773 crores in Mar 14 (-2.37%YOY growth).

Direct Agri Advances increased from Rs. 1,08,584 crores in Mar 13 to Rs. 1,20,253 crores in Mar 14 (10.75% YOY growth).

International Advances increased from Rs 1,69,065 crores in Mar 13 to Rs.2,14,302 crores in Mar 14 (YOY growth of 26.76%).

KEY FINANCIAL RATIOS (SBI):

Return on Assets: 0.65% in March 14 (0.97% in March 13).

Return on Equity: 10.49% in March 14 (15.94% in March 13).

Average Cost of Deposits: 6.27% in March 14 (6.25% in March 13).

Yield on Advances: 10.47% in March 14 (10.80% in March 13)

Performance of Associates and Subsidiaries:

Net Profit of the 5 Associate Banks declined from Rs. 3,678 crores in FY13 to Rs. 2,777 crores in FY14.

SBI Cards & Payment Services (Pvt) Ltd registered a net profit after tax of Rs.293 crores in FY14 against Rs. Rs.136 in FY 13 (YOY growth of 115%).

SBI Funds Management recorded a YOY growth of 81% in Net Profit from Rs. 86 crores (Mar 13) to Rs. 156 crores (Mar 14).

The SBI Life Insurance Company Ltd posted a Net Profit after tax of Rs.740 crores in FY14, a YOY growth of 19%, from Rs. 622 crores in Mar 13.

The SBI Capital Market Ltd has posted a Net Profit of Rs. 262 crores in FY14, a YOY growth of (-)16.35% over Rs. 314 crores in FY 13.