State Bank of India (SBI) reported a 30% year-on-year (yoy) growth in net profit for the July-September quarter, helped by lower provisions for non-performing assets (NPAs). The growth in net interest income (NII) was a modest 5.3% yoy to R10,974 crore. SBI’s asset quality deteriorated during the quarter with gross NPAs sequentially rising by 18 bps to 5.15% and net NPA up 22 bps to 2.44%. SBI’s share price on Friday fell by 3.89% on BSE to close at R2,156.35.
SBI chairman Pratip Chaudhuri said the lower provisioning for the quarter were on account of the bank, containing the accretion of NPAs and the front loading of the provisions for non-performing Kingfisher Airlines (KFA) account in the April-June quarter. The bank’s net interest margins (NIMs) were down sequentially by 9 basis points (bps) to 3.77%. Chaudhuri said the fall in NIMs was on account of the lending rate cuts in segments like SME and the base rate cut. Also the current account savings account (Casa) ratio of the bank fell sequentially by over 100 bps to 44.95%. The bank has guided for maintaining NIMs at 3.75% in 2012-13.
The public sector lender’s gross NPAs were up by around R2,000 crore to R49,202 crore; in the June quarter they had risen R7,480 crore to R47,156 crore. As far as the R1,200-crore KFA exposure is concerned, Chaudhuri said the bank had fully provided for the account earlier in the year rather than staggering the provisions over several quarters. The provision coverage ratio of the bank stood at 62.78% as on September 30, and capital adequacy ratio contracted to 12.63% from 13.14% recorded in the previous quarter.
The bank saw slippages of R8,500 crore, though it also saw upgradations to the tune of R3,048 crore and cash recovery of R1,428 crore. Some of the accounts that slipped into NPAs included Nitco Tiles, Max Mobile, Kamat Hotels and Reid and Taylor, S Kumars.
The bank restructured assets worth R4,694 crore in the quarter compared with R560 crore in the previous quarter. SBI classified troubled accounts like Bharti Shipyard, Hotel Leelaventure and HCC as restructured accounts in the quarter. The bank expects a pipeline of R4,000 crore worth of assets to be restructured in the October-December quarter.
Chaudhuri said NII remained muted because bank’s loan growth has been a little slow, particularly in the mid-corporate and SME segments. The overall loan book in the quarter grew 17.94% yoy to R8.1 lakh crore. Large corporate advances grew 27% yoy to R1.1 lakh crore, mid-corporate advances by 8% yoy to R1.7 lakh crore, retail by 13.63% to R1.7 lakh crore and SME by 13.25% to R1.3 lakh crore. It maintained loan growth targets for the year at 16-18%.
SBI’s deposit base grew about 16.5% yoy to R11.3 lakh crore, with the savings bank deposit growing by 12.52% yoy to R3.9 lakh crore.
