State Bank of India (SBI) on Friday reported a net profit of Rs 3,041 crore in the fourth quarter ended March 31, a drop of 7.8% from Rs 3,299 crore a year ago, but still managed to beat analysts' expectations which were anticipating a steeper 16% decline.
Despite the drop in net profit, SBI counter performed exceeding well on the bourses, with the stock ending with gains of 9.63% (up Rs 241.85) at Rs 2,753.50 a share on NSE.
Improvement in asset quality coupled with higher other income and net interest income in the last quarter helped the India's largest commercial bank beat street estimates.
There was a marked improvement in asset quality with net non-performing loans growing to just 2.57% of assets, down sequentially from 3.24% in the December quarter.
While other income grew 18.7% at Rs 6,586 crore during the quarter, net interest income jumped 16% on year to Rs 12,902 crore from Rs 11,078 crore.
Fresh slippages were controlled at Rs 7,947 crore during the quarter and was much lower than Rs 11,400 crore in the previous quarter.
Even as SBI's recovery stood at Rs 3,389 crore compared with Rs 1,538 crore in the previous quarter and write-offs were maintained at Rs 5,698 crore as against Rs 5,077 crore, provisioning for bad loans was up at 48%.
SBI is now more confident about repayment of loans by the large corporates going ahead, as the bank's overall lending jumped 38% on year during the quarter at Rs 2,42,719 crore.
Despite the recent rupee depreciation, SBI chairperson Arundhati Bhattacharya sees export led sectors such as gems and jewellery and textile reviving amid positive signs of recovery in economies of the US and Europe.
SBI expects a revival in core sectors under the new government that would give the necessary push in its immediate urge to create jobs.
"We see growth in the infrastructure sector coming back. Manufacturing sector is also expected to turnaround. This is one sector which creates jobs," the SBI chief said.
"We expect the job-intensive manufacturing sector to do better. I also expect all the traditional sectors of the economy doing well,".
The new government would usher in an era where government and bureaucracy would work cohesively and not at cross purposes, Arundhati told dna.
Elaborating on the growth areas, she further said mining and metals were once again doing well.
"Though there are issues, if reopening of mines in states of Karnataka and Goa are expedited the sectors are expected to do well," said the SBI chairperson.
In the domestic sector, Bhattacharya sees recovery in the telecom sector.
"If you look at the telecom sector, which was first to get into the downturn, is now starting doing well. They have participated in spectrum auction without running up huge debt while their average revenues per users are up. Their cash flows are good and most are EBIDTA positive.