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As SBI scans for minor fractures, net profit slumps 66%

The profit drop was more than 50% expected by the analysts' community though the percentage fall was closer to third quarter fall of 62%.

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The State Bank of India reported a net profit of Rs 1,263.81 crore for the quarter ended March 2016, a steep drop of 66% as compared to Rs 3,742 crore in the corresponding quarter of FY15. Slippages rose by about 50% over third quarter from Rs 20,692 crore to Rs 30,313 crore.

The profit drop was more than 50% expected by the analysts' community though the percentage fall was closer to third quarter fall of 62%.

"Bank has recognised the provisioning impact in line with RBI's Asset Quality Review as well as in respect of other weak accounts to proactively address possible future requirements," said chairman Arundhati Bhattacharya.

Country's largest bank has recognised most of its stressed assets proactively, particularly providing for all of the assets under the Asset Quality Review, Bhattacharya said, soothing the nerves of investors, but added that another Rs 31,000 crore of assets were under "special watch".

"The entire impact of the Asset Quality Review has been taken in the fourth quarter. We have done a lot of cleanup as a result of which loan provision has gone up by 143%. We have nearly and fully gone through accounts by accounts to try and determine what are the weaknesses and try and recognise all of them as proactively as possible," she said.

The bank recognised many of the large accounts as stressed on a proactive basis, even those accounts which weren't AQRs following its review as these accounts have already been classified in the books of other banks for showing stress.

"As a result of this, we believe that much of the stress has been currently recognised," the chairman said while addressing the media during a press conference.

Out of fourth quarter slippages, AQR accounted for Rs 9,000 crore against Rs 14,000 crore recognised in the third quarter. Another Rs 1,039 crore of slippages came from accounts like personal and agri loans and advances to SMEs. The rest Rs 20,000 crore stress was seen in the usual suspects like large corporate borrowers in power (Rs 4,748 crore), iron and steel (Rs 4,299 core), engineering (Rs 3,574 crore), oil and gas (Rs 3,396 core) and construction (Rs 2,608 crore) and chemicals (Rs 2,608 crore) among other sectors.

The average cost of deposits declined to 6.22% from 6.39% year ago. The yield on advances dropped from 10.55% to 10.00%, resulting in a lower Net Interest Margin which declined to 2.96% in March FY16 from 3.16% in March FY15.

Net Interest Income increased from Rs 14,712 crore to Rs 15,291 crore, registering a growth of 3.94% while non-interest income rose 25.61% from Rs 8,515 crore to Rs 10,696 crore driven by an increase of 18.22% in fee income and 44.47% in recovery in written off accounts.

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