State Bank of India (SBI) on Monday posted a 13.61 per cent fall in first quarter net profit as the bank which is battling a slowdown in the economy witnessed a surge in bad loans,especially in small and medium and enterprises and agriculture loan accounts.
Gross non-performing assets (NPAs) rose sharply to 5.56 per cent of advances at Rs 60,891 crore as against Rs 47,156 crore (4.99 per cent) in the same quarter of last year and Rs 51,189 crore (4.75 per cent) at the end of March 2013. As a result,net profit fell to Rs 3,241 crore in June quarter from Rs 3,752 crore a year earlier. Apart from higher NPAs,higher operating expenses and muted growth in interest income also impacted its performance. Operating expenses surged by 30.96 per cent to Rs 8,435 crore mainly due to a sharp rise in employee expenses while net interest income showed a rise of 3.48 per cent at Rs 11,512 crore.
SBIs performance was weaker than its smaller public sector counterparts which witnessed a fall in profit growth. In the case of Punjab National Bank,which posted a marginal 2.4 per cent growth in net profit at Rs 1,275.32 crore in June quarter,poor credit growth along with higher provisioning squeezed margins and impacted profitability.
Bank of Barodas net profit for the quarter ended June rose just 3 per cent to Rs 1,168 crore even as the deteriorating asset quality (with NPAs at 2.99 per cent) of the bank dragged its share to more than three-year low.
On the other hand,provate banks had done well with ICICI Bank reporting 25 per cent growth in standalone net profit at Rs 2,274.21 crore for the first quarter ended June 30,driven by higher net interest income. HDFC Banks profits rose 30 per cent in the first quarter,in line with its profit growth for every quarter in the last decade.
SBI shares fell to their lowest in more than a year and a half at Rs 1,575 in intra-day trading before closing 3.4 per cent down at Rs 1,604.80.
On the banks ongoing battle against bad loans,SBI chairman Pratip Chaudhuri said,Its a continuous process,We are continuing our battle. We are doing our best and we have not thrown in our towel. Im more surprised by the sharp spike in agriculture NPAs. Its because of our inability to cope up with large number of renewals.