SBI Q3 net profit rises by 4% as core income falls on higher provisioning on bad assets
SBI fell 3.5 per cent after the result, but later recovered to close down 1.80 per cent.
The SBI chief said mid-corporate segment continued to see some defaults, making the bank little hesitant and selective in lending to this sector.
Net interest income (NII), the core income for a bank, dipped 3.16 per cent to Rs 11,154 crore in the third quarter ended December 31 due to shifting of Rs 20,000 crore of pension corpus to a separate trust along with a rise in interest expended.
Kotak Securities banking analyst Saday Sinha said the SBI's NII was impacted due to a sharp margin contraction (down 65 bps), while net profit was impacted by higher NPA provisions, which spiked 50 per cent sequentially, despite robust other income growth, which clipped 76 per cent.
Although addition to stressed assets is marginally down, it still remains at elevated levels, he said.
Total provisioning of the bank stood at Rs 4,394.70 crore during the December quarter, up from Rs 3,996.97 crore in the corresponding period last fiscal, SBI said in a statement.
The gross non-performing assets, which represents portion of bad loans, stood at Rs 53,457 crore at the end of December, up from Rs 40,098 crore in the year ago period.
However, Kotak Securities gave an 'Accumulate' call on SBI shares, saying the current market price is reasonable.
IndiaInfoline Research head Amar Ambani said SBI's disappointing numbers, which is the lowest growth rate in net income in six quarters, belie the hypothesis that the worst of the credit cycle is behind
