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This is an archive article published on February 15, 2014

SBI Q3 net falls 34% on higher NPA provisioning

On a consolidated basis, the SBI Group’s net profit plummeted by 40 per cent to Rs 2,838 crore during the October-December quarter.

Arundhati Bhattacharya, Chairperson, State Bank of India Arundhati Bhattacharya, Chairperson, State Bank of India

State Bank of India on Friday posted a 34 per cent decline in net profit at Rs 2,234.34 crore for the third quarter of the fiscal on account of higher provisioning for bad loans.

Reflecting the rising bad loans that have impacted profitability of banks, SBI is the latest amongst its public sector peers, including Punjab National Bank and United Bank of India, to post weak financial results. SBI chairperson Arundhati Bhattacharya said that bulk of the stress on assets came from mid-corporate and the small-and-medium enterprise (SME) segment and hoped for a recovery with higher GDP growth.

“We need at least a couple of quarters of uptick in GDP for the asset quality to be better. I see more pain coming in,” she said. The lender, the country’s largest, has decided to move the stressed assets recovery branches that were reporting to the national banking group so as to have better focus and outcomes.

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“We have now changed the structure and created posts for four general manager – North, South, East, West, who will report to the stress management group and will actually be owning these stressed asset recovery branches in the circles,” Bhattacharya said.

SBI also plans to conduct weekly reviews and install new technology to quickly identify loan accounts showing signs of stress to prevent further weakening of its asset quality.

On a standalone basis, SBI had a net profit of Rs 3,396 crore in the October-December quarter of FY14. Total provisioning of non-performing assets jumped up by 23 per cent to Rs 3,428.59 crore during the third quarter of the fiscal, as against Rs 2,766.18 crore a year ago. SBI’s portfolio quality declined further during the quarter. Gross non-performing assets (NPAs), which represents portion of bad loans, stood at Rs 67,799.33 crore at the end of  the third quarter, up from Rs 53,457 crore in the year-ago period.

Gross NPAs, as a per cent of gross advances, rose to 5.73 per cent in the quarter, as against 5.30 per cent a year ago. Meanwhile, net NPAs during the third quarter rose to 3.24 per cent, from 2.59 per cent in the period a year earlier. The core profitability gauge, net interest income, grew 13.10 per cent to Rs 12,640 crore, while non-interest income rose to 4,190 crore from Rs 3,626.74 crore.

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SBI also had Rs 11,000 crore in fresh slippages, including Rs 9,500 crore from SMEs and mid-corporates and added Rs 6,165 crore into the restructured book during the quarter, while a cleaning up of balance sheet resulted in a write-off of around Rs 5,000 crore, Bhattacharya said.

Total income of the bank rose to Rs 39,061 crore during the third quarter from Rs 33,992 crore in the same period a year ago, SBI said in a filing to the Bombay Stock Exchange.

On a consolidated basis, the SBI Group’s net profit plummeted by 40 per cent to Rs 2,838 crore during the October-December quarter.

 

(With PTI inputs)

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