SBI’s bad loan provisioning is 4 times the net profit of HDFC Bank

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Published: November 10, 2017 6:26:05 PM

India’s largest bank State Bank of India on Friday showed a little improvement in the asset quality. We take a look at key figures of India's largest bank by market capitalisation HDFC Bank and the largest bank by assets State Bank of India.

Photo for representational purposes only. (Image: Reuters)

India’s largest bank by assets State Bank of India today showed a little improvement in the asset quality. As the banking sector in India is undergoing the immense pressure of bad loans on their books, especially PSU banks, any enhancement in the asset quality is taken as a good sign. Following the earnings announcement with signs of improving asset quality, the stock of State Bank of India shot up 7.77% to Rs 338.15 before closing 6.2% higher at Rs 333.2 on BSE.

Interestingly, SBI has made provisions of Rs 16,715.2 crore for the July-September quarter which is four times the net profit of India’s biggest bank by market capitalisation HDFC Bank for the same quarter under review. HDFC Bank reported a standalone profit of Rs 4,151.03 crore.

Assets too stressed

The bad loan problem is a part of the banking system. But the stressed assets problem in Indian banking system spiked heavily in the October-December quarter of 2015. During the same time Punjab National Bank was the worst hit lender among the major PSU banks as its net profit nosedived 91% to Rs 51 crore and in the subsequent quarter, it posted a loss of Rs 5,367.14 crore.

Government boost

Finance minister Arun Jaitley kept the hopes alive to recover the NPA-laden banking system, talking of prudent financial reforms to revive banking growth several times since January this year. Recently, in October 2017 he announced a mega plan of Rs 2.11 lakh crore to recapitalise the stressed PSU (public sector undertaking) banks.Following the announcement, Sensex gained 509.99 points to hit high of 33,117.33. The heavyweight banking stocks such as Punjab National Bank, State Bank of India rose up to 46% in a day.

HDFC Bank vs State Bank of India Q2 performace at glance:

ParameterHDFC BankSBI
Total Income (Rs crore)19,670.2865,429.63
Net profit (Rs crore)4,151.031,581.55
Gross NPAs (Rs crore)7,702.841,86,114.6
Gross NPAs (%)1.269.83
Provisions (Rs crore)1,476.1916,715.20
Stock performance since January 2017 (%)51.6233.35
Fund raised via IPOs of insurance units (Rs crore)87008400

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