Q3 bad loans were down at Rs 9,640 crore; net profit rose 30.24% at Rs 2,910 crore
India's largest lender State Bank of India (SBI) kept a tight lid on its bad loans that resulted in lower accretion of non-performing loans in the third quarter ending December 31, and cheering the markets. SBI's result impact was so strong on other PSU bank stocks that shares of banks that had came out with dismal earnings performance such as Bank of India also posted significant gains on the bourses.
The country's largest commercial lending bank reported a 30.24 % rise in net profit at Rs 2,910 crore compared with Rs 2,234 crore a year ago, driven by a robust 24 % rise in non-interest income. However, higher provision of Rs 5,235 crore as against Rs 4,150 crore in the year ago quarter put pressure on the overall profit.
Unlike peer banks, SBI, which controls one quarter of the total bank credit in the country, bucked the trend by keeping a check on fresh accretion of bad loans. Enthused by the results, SBI share ended 8% higher at Rs 307.05 on the Bombay Stock exchange after the earnings announcement.
Consolidating on stable asset quality performance, its non-performing asset ratio declined to 4.90% in the December 2014 quarter from 5.73% in December 2013. In absolute terms, gross NPAs were down to Rs 61,991 crore from Rs 67,799 crore a year ago.
The fresh bad loans accrued during the quarter was down to Rs 9,640 crore from a previous run rate of Rs 12,500 crore in the previous quarters. The bank also wrote off Rs 5,097 crore of loans higher than the Rs 5,077 crore loans in the corresponding period last year. In the preceding quarter, the bank wrote off Rs 4,787 crore of bad loans. It has a restructuring pipeline of over Rs 5,000 crore of loans.
Arundhati Bhattacharya, chairman SBI, said at a press conference, "We have worked very hard to keep our bad loans down. We will continue to closely monitor the stressed accounts so that fresh slippages are under control. SBI plans a mega auction of bad loans of Rs 1,200 crore on March 14, 2015."
This will include individual houses, plant and machinery from 300 stressed accounts.
The bank's total income rose to Rs 43,784 crore in the October-December quarter as against Rs 39,068 crore during the corresponding quarter of the previous fiscal. Its net interest income rose 9% to Rs 13,777 crore from Rs 12,640 crore during corresponding period.
Its loan book expanded by 7.28% to Rs 12,32,544 crore, while deposits grew by 11.8% to Rs 15,10,076 crore and staff expenses were down 0.43% from Rs 5,867 crore from Rs 5,842 crore.
Saday Sinha, banking analyst, Kotak Securities said, "Positive surprise came on the fresh impairment which is down to Rs 9,640 crore as against a run rate of Rs 12,500 crore in the previous two quarters. Core earnings came in line with out expectations while the net profit was lower than our expectations on the back of higher provisions, despite better than expected operating performance. The good performance on the asset quality front is likely to bode well for the stock."
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