State Bank of India (SBI) on Tuesday reported a net profit of Rs 3,692 crore in the June quarter, up 10.2% y-o-y on the back of higher other income. The bank’s other income rose 19.7% y-o-y to Rs 5,088 crore.
SBI chairman Arundhati Bhattacharya said she expects credit growth to take another two quarters to pick up. Total advances grew 6.61% to Rs 12.32 lakh crore and deposits grew 13.7% to Rs 14.18 lakh crore in Q1 FY16.
The bank restructured Rs 6,012-crore loans in the quarter and saw fresh slippages of Rs 7,318 crore, up 53% sequentially. “The broad outlook on NPAs is that stress is definitely easing and we are seeing the bigger accounts becoming a little less stressed,” she said.
Operating profit of the lender rose 4.7% y-o-y to Rs 9,202 crore, while the domestic net interest margin (NIM) fell 25 basis points (bps) sequentially to 3.29%. Bhattacharya said the dip in margins was owing to the 30 bps cut in base rate and subdued credit growth in the quarter. SBI’s net interest income rose 3.6% y-o-y to Rs 13,732 crore.
SBI’s asset quality deteriorated with gross non-performing assets (NPAs) as a percentage of gross advances rising 4 bps sequentially to 4.29% at the end of the June quarter. Net NPA ratio also saw a sequential rise of 12 bps.
Recoveries in the June quarter at Rs 1,209 crore, 73% lower than the preceeding quarter, and the bank also upgraded accounts worth Rs 1,494 crore in the quarter from NPA to standard category.
“I think we need to understand clearly that the growth we look at is the kind of growth that will stay with us,” she said, adding the bank does not want to grow its books suddenly and then take a hit a few years later.
Although the results cheered the Street and the bank shares fell as much as 5.25% on BSE on Tuesday to close at Rs 269.3, down 4.9%. On a year-to-date (YTD) basis, SBI shares are down 13.64% against a 1.3% rally in Sensex in the same period.