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SBI first-quarter net profit falls 20.4% to Rs2,006 cr

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12 August 2017

State Bank of India (SBI), the country's largest lender, has reported a more than 20-per cent decline in its fiscal first quarter net profit on the back of falling interest margins and still-high provisioning or contingencies.

Arundhati BhattacharyaSBI reported a consolidated net profit of Rs2,005.53 crore for the April-June 2017-18 quarter against a consolidated net profit of Rs2,520.96 crore for the year-ago quarter.

However, based on the net profit of SBI and similar numbers of its merged associates, the combined net profit of SBI rose more than four-fold from a year ago.

Profit on the consolidated banks' accounts rose 435 per cent to Rs2,006 crore, from Rs374 crore net a year earlier, chairman Arundhati Bhattacharya told reporters.

SBI merged five associate banks with itself effective 1 April, so the Rs2,005.53 crore profit in the quarter ended June is not comparable with the year-ago number, she added.

The bank's consolidated net profit, including that of its asset management and insurance arms, grew almost three times to Rs3,032 crore from Rs1,046 crore a year ago.

SBI, which merged five of its associate banks in the beginning of the fiscal year, said the slip in net profit for the April-June quarter was more than four times if the numbers of merged entities were taken into account.

SBI's net interest income fell 3.5 per cent to Rs17,606 crore on an year-on-year basis, due mainly to lower lending rates. The bank's loan portfolio shrank Rs65,000 crore to Rs18,50,000 crore.

The advances portfolio also dipped because of a shift of Rs40,000 crore to commercial paper. Provisions for bad loans declined 26 per cent to Rs9,869 crore and gross bad loans rose to 9.9 per cent at Rs1,88,000 crore. Net bad loans ware at 5.6 per cent of total loans.

The bank claims its overall financials continued to deteriorate as it grappled with the integration of its subsidiaries in the country's biggest-ever banking sector merger.

SBI says it did not gain from the merger as its loan books did not grow proportionately during the first quarter of the merger. SBI was in fact, expecting a surge in the retail lending with the merger.

Profit on the consolidated banks' accounts rose 435 per cent to Rs2,006 crore, from Rs374 crore net a year earlier, chairman Arundhati Bhattacharya told reporters.

"You cannot compare merged entity with the solo because there is an alignment of books that is going on," Bhattacharya told reporters. "This one quarter we have only spent to getting our house in order whether it be data merger, people transfers, reorganisation of the branches, so all of that has happened."





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