Weakening asset quality and lower net interest income have played spoilsport for State Bank of India (SBI) during the quarter ended March 2013.
Leading the poor show by public sector banks,the countrys largest lender reported a 18.5 per cent decline in net profit at Rs 3,299 crore for the fourth quarter from Rs 4,050 crore in the same period of the previous year,sending its share plunging by nearly 8 per cent on the bourses.
SBIs gross non-performing assets (NPAs),which represents portion of bad loans,stood at Rs 51,189 crore at the end of March,up from Rs 39,676 crore in the year ago period as slowing economic growth,stalled projects and high interest costs hit borrowers hard.
The gross NPA as a percentage of total loan rose to 4.75 per cent which is also the highest among Indian banks during the quarter,from 4.44 per cent in the year ago period. With worried investors dumping SBI shares,which closed 7.96 per
cent lower at Rs 2,176.20 on the BSE.
While ballooning bad loans and higher provisioning hit the bottom lines of PSU banks,including Punjab National Bank (PNB),Bank of Baroda and Bank of India for the quarter ended March 2013,private sectors banks like HDFC Bank,ICICI Bank and Axis Bank managed to steal a march over their PSU counterparts due to their better loan mix and credit management.
PNBs net profit declined 20.6 per cent during the fourth quarter as it made higher provisioning for non-performing assets. Bank of Baroda posted a 32 per cent fall in profit while Bank of India reported a 21 per cent slide in its net profit.
PSU banks are reporting weak performance due to asset quality pressures and higher provisioning. Private banks have not been unscathed but face relatively lower pressures, said Vaibhav Agarwal,vice president (research),Angel Broking.