SBI's Q2 net rises over 12 per cent to Rs2,810 crore, but asset quality suffers

State Bank of India, the country's top lender, has reported a 12.36 per cent increase in its net profit for the fiscal second quarter ended 31 September 2011, at Rs2,810 crore, against a net profit of Rs2,501 crore in the September 2010 quarter. Quarterly net profit rose 77.48 per cent sequentially compared to the Rs1,584 crore profit reported in the April-June 2011 quarter.

Operating profit for the September 2011 quarter grew 17.58 per cent year-on-year and by 3.2 per cent sequentially.

Consolidated net profit for the September 2011 quarter stood at Rs2,363.95 crore while total income of the group increased to Rs41,249.08 crore from Rs37,925.44 crore in the same period last fiscal, SBI said in a filing with the Bombay Stock Exchange (BSE).

SBI, however, saw its net non-performing assets increase to 2.04 per cent of total assets at the end of September, from 1.7 per cent a year earlier. It is this deterioration in banks' asset quality of SBI and banks in general India that prompted Moody's Investors Service to cut its outlook on the Indian banking sector to "negative" from "stable." 

However, with fresh capital infusion expected this fiscal, SBI expects the proportion of NPAs to decline.

SBI also saw its net interest margin peak to 3.70 per cent, up from 3.30 per cent as at end-September 2010. The bank has registered an all-time high NIM of 3.79 per cent during Q2FY12 (3.43 per cent in Q2FY11). Domestic NIM has crossed 4 per cent during Q2FY12 to reach 4.07 per cent, the bank said in its earnings release.