State Bank of India (SBI) on Friday reported a net profit of Rs 3,100 crore in the September quarter, up 33.4% from a year earlier, on the back of higher other income, which rose 39% y-o-y.
Addressing a press conference, SBI chairman Arundhati Bhattacharya said the bank expected to grow at 11-12% in the next two quarters. “The commercial paper (CP) market is for the short term; people prefer it because currently CPs are cheaper, and available at below base rates.
Therefore, you haven’t seen the banks’ loan books grow; instead, there is a growth in the CP market.”
SBI’s operating profit showed a healthy increase of 33.43% at Rs 8,422 crore y-o-y, while domestic net interest margin (NIM) fell 5 bps sequentially to 3.49%.
Asset quality stabilised with gross non-performing assets (NPAs) as a percentage of gross advances falling 1 bp sequentially to 4.89% at the end of the September quarter. Net NPA ratio, however, saw a sequential rise of 7 bps.
In absolute terms, gross NPAs rose marginally, by less than 1%, to Rs 60,712 crore on a sequential basis and Bhattacharya said there would not be any sharp change in asset quality as it would take another 12 months to recover. “It will be a gradual improvement. Once the demand cycle turns, things will happen at a faster pace,” she said.
Recoveries in the September quarter fell 31.7% to Rs 965 crore and the bank upgraded accounts worth Rs 1, 670 crore to the standard category in Q2FY15.
SBI reported an 8.36% growth in net interest income (NII) to Rs 13,275 crore and its other income grew 39.4% to Rs 4,571 crore, as bond yields softened by 25 bps during the quarter. Provisions for bad loans grew 52% y-o-y to Rs 4,028 crore in Q2FY15 and total provisions were up 35% y-o-y.
The mid-corporate segment formed the largest chunk of bad loans at 11.15% of the advances, followed by agriculture at 10.34%. The bank restructured loans worth Rs 7,884 crore in Q2 FY15 and its restructuring pipeline for the rest of the fiscal stands at Rs 3,000 crore.
Slippages fell 8% to Rs 7,700 crore in Q2 and Bhattacharya said the bank had seen betterment across the board and not in any specific segment.
The slippages, Bhattacharya said, were mainly in the mid-corporate account and around Rs 600 crore from the agriculture sector. “There is a bit of slippage on personal loans, especially with respect of salary accounts for state government employees. But much of this will come back because 2-3 states have not given salaries for two months,” she added.
Total advances as on September 30 stood at Rs 12,42,638 crore, up 9% from the year-ago period. Of this, domestic advances were up 6.8% at Rs 10,15,392 crore on a y-o-y basis.
Credit to large corporates increased 17.23% to Rs 2,33,012 crore and retail advances rose 11.19% to Rs 2,49,259 crore on a year-on-year basis, but the mid-corporate segment saw a 2.7% y-o-y decline in advances at Rs 2,15,880 crore. SBI’s deposits increased to Rs 14,73,785 crore, a y-o-y growth of 14%.
The results cheered the Street and the scrip rose as much as 3.21% on the BSE in intraday trade. However, it closed at Rs 2,788.45, up 2.55%. YTD, the SBI scrip has outperformed the markets with a gain of 58% against a 32.5% Sensex rally during the period.