State Bank of India on Friday reported that its third-quarter net profit more than doubled to Rs 2,610 crore as its loan loss provisions declined and non-interest income got a one-off bump up from sale of stake in a subsidiary. The bank’s gross non-performing assets ratio inched up to 7.23 per cent at the end of December compared to 7.14 per cent three months earlier.
SBI’s net profit rose 134 per cent from Rs 1,115 crore in Q3 FY16 to Rs 2,610 crore for the three months ended December 2016. This was the bank’s first profit increase in 5 quarters. Net interest income rose only 7.7 per cent to Rs 14,752 crore as demonetisation hit credit growth and lowered lending rates. The bank’s domestic net interest margin also declined by 19 basis points from a year earlier to 3.03 per cent for the December quarter; it was down 2 basis points sequentially too.
SBI chairman Arundhati Bhattacharya said while she was hopeful of recoveries in the current quarter, demonetisation has delayed it. “Demonetisation has actually put us back by a quarter, so we are working very hard but I do not know if they can come in this quarter or may be they will slip over to the next year,” she said.
SBI’s advances grew only 4.81 per cent from a year ago to Rs 14.97 lakh crore as the mid-corporate loan book shrunk. Retail advances continued to grow logging a 17.5 per cent rate, thanks to home loans which grew 18.5 per cent. Deposits grew 22.10 per cent thanks to demonetisation and reached Rs 20.40 lakh crore at the end of December.
The bank’s total income was boosted by the Rs 1,755 crore booked from a sale of 3.90 per cent stake in SBI Life Insurance Co Ltd during the quarter. Excluding this, growth in non-interest income would have been 29.90 per cent because of higher treasury profit.
While SBI’s operating profit was 30 per cent, the boost to net profit came from the 5.23 per cent decline in loan loss provisions. Gross NPAs stood at Rs 1.08 lakh crore at the end of December marginally up from the Rs 1.06 lakh crore at the end of September. However, this number was a 48.6 per cent jump up from Rs 72,791.73 crore a year ago. SBI’s net NPAs during the third quarter rose to 4.24 per cent.
Of the total slippages of Rs 10,185 crore into bad loan category in the quarter, 73 per cent originated from the watchlist. SBI shares closed at Rs 276.25 on BSE on Friday, up 0.15 per cent from the previous close. In comparison, the benchmark Sensex was little changed from Thursday’s close.