DNA MONEY EDIT: How SBI’s turnaround brings cheer

For State Bank of India (SBI), swinging to a profit in July-September after three quarters of continuous loss, though helped by a one-time gain and lower provisions, is no mean feat. Chairman Rajnish Kumar acknowledges that the profit is modest, but states that there is no looking back. The biggest lender in the country reported a net profit of Rs 945 crore in the second quarter (Q2) compared to a loss of Rs 4,876 crore in the preceding three months. The bank would have posted yet another quarter of loss had it not reported a one-time gain of Rs 1,087 crore from the sale of investment in the merchant banking business and Rs 473 crore from a stake sale in its joint venture SBI General Insurance.

Though the gross bad loans rose 10.6% to Rs 2.06 lakh crore in Q2 against Rs 1.86 lakh crore in the year-ago quarter, as a percentage of total advances, gross NPAs have improved on a sequential basis to 9.95% compared with 10.7% in Q1.

While the bank is awaiting a write-back of Rs 6,000 crore from the resolution of Essar Steel, a stressed account from the first list of accounts referred to the National Company Law Tribunal, its Rs 4,250 crore debt and equity exposure to IL&FS Group, the infrastructure lender whose sudden bankruptcy caused a crisis in the NBFC has created some heartburn.