Shares of SBI fell as much as 1.3% on the BSE in intra-day trade on Friday, but recovered to end at Rs 333.2, up 6.2%. So far in 2017, the SBI stock is up 33.31% against a 25.1% rise for the Sensex in the same period.
State Bank of India (SBI) on Friday reported a standalone net profit of Rs 1,582 crore for the September quarter of FY18, down 38% year-on-year (y-o-y) basis as provisions more than doubled to Rs 19,137 crore in the same period. Of the total provisions, the bank set aside Rs 16,715 crore for non-performing assets (NPAs). SBI’s asset quality slightly improved in the September quarter, with gross NPAs as a percentage of gross advances declining 14 basis points (bps) sequentially to 9.83%. The net NPA ratio also witnessed a quarter-on-quarter (q-o-q) fall of 54 bps. The bank’s provision coverage ratio (PCR) increased 431 bps sequentially to 65.1% in Q2. SBI chairman Rajnish Kumar said the idea was to enhance the bank’s loss-absorption capacity and move towards the international accounting standards. “We had some cushion available in the form of stake sale in SBI Life and we thought it prudent to increase our NPA coverage ratio which is 65%,” he said, adding that he wants the bank to be able to weather any storm in the future.
Shares of SBI fell as much as 1.3% on the BSE in intra-day trade on Friday, but recovered to end at Rs 333.2, up 6.2%. So far in 2017, the SBI stock is up 33.31% against a 25.1% rise for the Sensex in the same period. India’s largest lender reported a 11% year-on-year (y-o-y) rise in operating profit in Q2 FY18 at Rs 14,563 crore. SBI’s net interest income — the difference between interest earned and interest expended — rose 2.6% y-o-y to Rs 18,586 crore and the NIM – a key measure of profitability – fell 36 bps y-o-y to 2.43%.
The lender’s capital adequacy ratio (CAR) rose 25 bps sequentially to 13.56% in Q1. In June, the bank had raised Rs 15,000 crore through a qualified institutional placement, thereby beefing up its capital adequacy ratio. Kumar said that most companies named by the Reserve Bank of India (RBI) in the second list of defaulters are likely to be referred to the NCLT. “Almost the entire list will go to the NCLT. By March, the directions would be determined for the cases in the first list. The whole strategy around corporate cases, more and more, will probably be referred to the NCLT,” Kumar said.
In Q2FY18, of the total slippages of Rs 9,026 crore into bad loan category, Rs 4,538 crore originated from the corporate book, Rs 2,448 crore belonged to the watchlist. In Q4FY16, SBI had created a watch-list of accounts worth Rs 31,352 crore and expected 70% of it to slip into non-performing category in a worst-case scenario. The watchlist had expanded to Rs 32,427 crore following the merger. The list stands at Rs 21,288 crore following fresh slippages in the September quarter.
Recoveries in Q2 FY18 were at Rs 2,210 crore and the bank also upgraded loans worth Rs 1,113 crore from non-performing to standard. SBI reported loan growth of 0.95% y-o-y to Rs 18.74 lakh crore in Q2 FY18 and its total deposits grew 10.27% y-o-y to Rs 23.78 lakh crore in the same period. Its investment in corporate bonds have increased 45% y-o-y to Rs 63,494 crore and investment in commercial papers have risen 41% on a y-o-y basis to Rs 54,129 crore.