State Bank of India (SBI) reported a 30% year-on-year (y-o-y) growth in net profits for the September quarter, boosted by sharply lower loan loss provisions. However, pre-provisioning profits slipped 1.6% y-o-y to R7,474 crore, signalling pressure on the top line which grew just 5.3% y-o-y to Rs 10,974 crore.
The net interest margin slipped 9 basis points sequentially to 3.77% while non-performing assets (NPAs) rose; gross NPAs rose 18 bps sequentially to 5.15% while net NPAs were up 22 bps to 2.44%. The weak set of numbers, together with the deteriorating asset quality, sent the SBI stock crashing 3.89% on the BSE on Friday to R2,156.35.
SBI chairman Pratip Chaudhuri attributed the lower provisions to the bank having contained the accretion of NPAs as also front-loading provisions for accounts like Kingfisher Airlines. Provisions fell 37% y-o-y and 34% sequentially. The bank’s balance sheet saw more toxic assets as gross NPAs were up by around R2,000 crore to R49,202 crore while the quantum of restructured assets jumped to R4,694 crore from R560 crore in the June quarter.
The bank said there was a pipeline of R4,000 crore worth of assets that may need to be restructured in the October-December quarter. SBI’s provision coverage ratio at the end of September was 62.78%.
He said SBI’s NII remained muted as loan growth had somewhat slowed, mainly in the mid-corporate and SME segments. Its loan book grew 17.94% y-o-y to R8.1 lakh crore in the quarter. Loan growth this year may be 16-18%.