The countrys largest lender, State Bank of India (SBI) posted a slow 4.08% year-on-year (y-o-y) rise in net profit to R3,396 crore in the three months to December on the back of weak net interest income (NII) growth. NII dipped 3.16% y-o-y to R11,154.46 crore owing to poor asset quality, pressure on yields and in part due to the transfer of pension funds to a trust. The SBI stock lost 1.8% on the BSE, ending Thursday at R2,214.35.
The banks asset quality deteriorated with both gross and net non-performing assets (NPAs) rising sequentially. While gross NPAs rose 15 basis points (bps) to 5.3%, net NPAs also rose 15 bps to 2.59%. The bank saw fresh slippages to the tune of R8,165 crore and made loan loss provisions of R2,766 crore. It has a loan restructuring pipeline of R3,700 crore for the quarter ending March 31.
Chairman Pratip Chaudhuri attributed the rise in NPAs to the economic slowdown, high interest rates and payments due from the government to contractors. Chaudhuri said the situation would improve in the January-March quarter as payments from government projects are expected to be cleared, improving the cash flows of contractors. Also, with a large number of mines being allowed to open, iron ore linkages to steel companies would improve, he added.
SBIs net interest margins remained under pressure as it contracted sequentially from 3.77% to 3.72%. The yield on advances declined from 10.93% in December 2011 to 10.75% in December 2012, while the cost of deposits rose from 5.9% to 6.31%.
The banks net advances book grew 15.6% y-o-y to Rs 9.78 lakh crore. The growth was led by large corporate advances which showed a 25.78% growth to Rs 1.56 lakh crore, agriculture advances that grew 24.25% y-o-y to Rs 1 lakh crore, and retail advances which saw a 13.98% growth to Rs 1.99 lakh crore. The mid-corporate segment advances grew 6.95% y-o-y to Rs 1.78 lakh crore, while small and medium enterprise (SME) advances grew 11.35% to Rs 1.7 lakh crore.
The deposits book also grew at 15.6% y-o-y to Rs 11.6 lakh crore. Savings bank deposits grew 11.7% on a yearly basis to Rs 4.1 lakh crore. Chaudhuri said that he expects to end the financial year with an 18% growth in loans and 14% deposit growth.
During the quarter, SBIs capital adequacy ratio declined to 12.21% compared with 12.63% in the previous quarter.