State Bank of India (SBI) has reported 30 per cent growth in net profit for the quarter ended September to Rs 3,658 crore from Rs 2,810 crore recorded in the same period of last year, due to lower provisioning towards bad loans. On a consolidated basis, the bank reported growth of 32 per cent in its net profit to Rs 4,575 crore, compared with Rs 3,470 crore reported during the July-September quarter of 2011-12.
Net interest income for the country’s largest bank, however, grew only five per cent to Rs 10,974 crore, on the back of higher cost of deposits and reduction in lending rates. “There was a deposit build-up in anticipation of loan growth, which did not happen, so there was a cost of carry,” said Chairman Pratip Chaudhuri at the media conference.
“During the April-October period, loans grew by Rs 40,000 crore while deposit growth was Rs 80,000 crore,” he said indicating the bank had excess liquidity but was unable to deploy it.
The bank has to deploy the additional resources in government securities which earn lower returns than that from loans. As a result, the net interest margin from domestic operation fell to 3.77 per cent compared to 4.3 per cent in the same period last year. SBI sees its NIM for the full year at 3.75 per cent.
Chaudhuri hinted the bank might lower its base rate to deploy excess liquidity. The bank will review its base rate shortly, he said. Provisioning towards non-performing assets was Rs 1,837 crore, lower by 37 per cent than the same period of the previous year.
According to Chaudhuri, the bank had front-loaded the NPA provisioning in the first quarter and, hence, had to provide a lower sum in this quarter. “For the loans to Kingfisher Airlines, for example, we had provided Rs 600 crore in Q1, while we were required to do Rs 300 crore each in Q1 and Q2. So, in this quarter, we did not have to make provision for that account,” Chaudhuri said. He added the bank had made full provisioning for the loans given to Kingfisher.
The provision coverage ratio for SBI fell for the second straight quarter, which was 62.78 per cent compared with 68.10 per cent as on March-end.
The bank has also made a profit on its equity trading portfolio of Rs 9 crore compared to a loss of Rs 479 crore in the same period of the previous year, while softening bonds yields helped it to write back Rs 248 crore provisioning made earlier.
Though the asset quality pressure continued, slippages accrued at a slower pace compared to the last two quarters.
The gross NPA ratio of the bank was 5.15 per cent compared to 4.99 per cent on June-end while the net NPA increased to 2.44 per cent from 2.22 per cent.
“Net slippages has come down substantially from Rs 7,000 crore (April-June) to Rs 2,000 crore (July-September),” he said adding the upgradation of loans to standard asset category was at Rs 3049 crore.
“The negative surprise came on the addition to stressed assets (Rs 13,200 crore against Rs 11,400 seen during the previous quarter). While gross slippage came at Rs 8,500 crore during Q2FY13 as against Rs 10,800 crore seen during previous quarter, addition to restructure book came higher at Rs 47 crore as against Rs 600 crore during the previous quarter. Higher recovery/upgradation was definitely positive, but sustaining this kind of run-rate in future would be difficult, a key risk in our view,” said Saday Sinha, vice-president, Equity Research, Kotak Securities.