At Rs 2,814.82 crore: SBI profit soars 122.7% on lower provisioning in Q4

‘Margins to be under pressure in near term on higher credit cost after merger’

By: ENS Economic Bureau | Mumbai | Published: May 20, 2017 3:11 am
sbi, state bank of india, sbi profit, sbi quarter profit, sbi net profit, business news, banking news MD Corporate Banking, Arundhati Bhattacharya, Chairman SBI and Rajnish Kumar, MD, National Banking Group in Kolkata on Friday. Express Photo by Subham Dutta

Aided by higher net interest income and lower provisions, State Bank of India, India’s top lender, has posted a 122.7 per cent increase in net profit for the quarter ended March 2017 at Rs 2,814.82 crore from Rs1,263.81 crore a year ago. However, gross non-performing assets ratio declined on a quarter-on-quarter basis.

Gross NPAs rose 14.4 per cent to Rs 1.12 lakh crore at the end of the March quarter from Rs 98,173 crore a year ago. The bank posted gross NPAs of Rs 1.08 lakh crore a quarter ago. As a percentage of total loans, gross NPAs stood at 6.9 per cent at the end of the March quarter compared with 7.23 per cent in the previous quarter and 6.5 per cent in the year-ago quarter. Net NPAs were at 3.71 per cent compared with 4.24 per cent in the previous quarter and 3.81 per cent in the same quarter last year.

The standalone net profit of the bank in fiscal 2016-17 increased by 5.36 per cent to Rs 10,484 crore from Rs 9,951 crore in the previous financial year. However, for the year ended March 2017, SBI’s consolidated net profit declined by about 98 per cent to Rs 241.23 crore from Rs 12,224.59 crore at the end of 2015-16 as the banks provisioning for the entire year had increased significantly.

SBI Chairman Arundhati Bhattacharya said it had been difficult but satisfying quarter and the biggest thing which had happened was the merger of five associate banks and Bharatiya Mahila Bank. SBI has done well on a solo basis and the bank has decided to absorb the maximum pain arising out of the merger as a result of which the current quarter would be stressful. “In the near term, margins will be under pressure due to elevated credit cost due to the merger. At the same time the deposits of the associate banks will be re-priced which will have a positive impact,” she said.

Owing to this two-way pressure, the outlook of the margins is stable, Bhattacharya said in a video conference.

Bhattacharya said the provision coverage ratio (PCR) had been increased from 60.69 per cent to 65.69 per cent to take care of the resolutions which would surface as a result of the merger. The impact on profit would not be much. The slippages were slowing down, she said adding that the telecom sector was now a cause for concern.

According to SBI, loan loss provisions were lowered to Rs 10,993 crore during the fourth quarter of last fiscal as against Rs 12,139 crore in the year-ago period. Net interest income increased by 17.33 per cent from Rs 15,401 crore in the last quarter of 2015-16 to Rs 18,071 crore for the fourth quarter of last fiscal. Total interest income increased by 10.36 per cent from Rs 42,942 crore in the fourth quarter of 2015-16 to Rs 47,393 crore in same period of 2016-17.

The fourth quarter result does not take into account acquisition of its five associates — State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala, and State Bank of Hyderabad — and Bharatiya Mahila Bank (BMB) as the merger came into effect from April 1.

Deposits of the bank stood at Rs 20,44,751 crore while advances were at Rs 16,27,273 crore. Retail loans constituted 22 per cent of the loan amount contributed by auto and home loans. Net interest margin (NIM) as of March 2017 stood at 2.84 per cent, she said.

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