SBI Q2 net down 35% at Rs 2,538 cr on high NPA provisions

State Bank of India’s (SBI) bottom line came under pressure in the second quarter ended September 2016 on a sharp rise in provisions for bad loans and lower interest income.

The country’s largest lender reported a 34.6% fall in its net profit to Rs 2,538 crore from Rs 3,879 crore in the same period a year ago. Sequentially, its net profitrose marginally from Rs 2,520 crore in the first quarter of 2016-17.

A tidy rise in other income – treasury revenue, fees and service tax refund of Rs 796 crore – supported its profits. Other income rose by 35.9% to Rs 8,424 crore during the quarter from Rs 6,197 crore in Q2FY16 Astrology and Numerology Trading Tips

Reflecting concerns over slippages and credit costs, SBI’s share fell by 3% to Rs 272 at close of trading on the BSE on Friday.

The net interest income - earnings from loans minus expenses on deposits - was flat (1.3% rise) at Rs 14,437 crore, from Rs 14,252 crore in Q2FY16. The lower credit offtake and reduction in lending rate impacted the bank’s interest income, SBI Chairperson Arundhati Bhattacharya said.

Provisions for non-performing assets (NPAs) rose to Rs 7,669 crore from Rs 3,841 crore in the same quarter a year ago.  In the first quarter of 2016-17, SBI had made provisions of Rs 6,339 crore for NPAs.

The bank’s provision coverage ratio improved to 62.12% in September 2016 from 61.57% in June 2016.

Its pool of bad loans grew sharply in 12 months to Rs 1,05,782 crore from Rs 56,834 crore a year ago. Sequentially, SBI managed to keep its asset quality under check as its gross NPAs were at Rs 1,01,541 crore at the end of June 2016 Stock Market Astrology Tips

Slippages into the bad loan category were about Rs 10,341 crore during the second quarter of 2016-17 from Rs 5,875 crore in the same period a year ago.

The outlook for resolution of stressed accounts was improving and recent amendments to rules for restructuring schemes would aid recoveries, Bhattacharya said.

SBI’s watch list for corporate loans that have high chances of slippage has declined to Rs 25,000 crore at the end of September from Rs 31,000 crore at the end of June.

SBI’s deposit base grew by 13.76% to Rs 18,58,999 crore and it raised the guidance for deposit growth to 15-15.5% from 13.5%. This revision comes on the back of a surge in money deposited in current and savings accounts after the government scrapped Rs 500 and Rs 1,000 notes as legal tender.

The bank’s gross advances rose by 8.11% to Rs 14,81831 crore. While retail credit – home, personal and vehicle loans – grew by 20.4% to Rs 3,50,465 crore,  loans to small enterprises shrunk by 6% to Rs 1,66,052 crore Commodity Trading Tips

SBI’s capital adequacy ratio was 13.94% with Common Equity Tier I Capital at 10.28%.