SBI Q1 net tanks 32% to Rs2,521 cr as NPA provisioning hits 89%

State Bank of India, the country's largest lender, has reported a 32-per cent year-on-year fall in its first-quarter net profit, at Rs2,521 crore, on the back of spike in provisioning for bad loans.

SBI's provisioning for losses on account of loans for the June quarter stood at Rs6,340 crore, up 89 per cent year-on-year, while impairment of standard assets were at Rs917 crore, up 131.58 per cent.

However, there is a silver lining as the amount of bad loans during the April-June quarter has considerably come down to Rs8,790 crore from Rs30,313 crore in the preceding quarter.

Net interest income edged up 4 per cent to Rs14,312 crore, although net interest margin declined 16 basis points to 2.83 per cent.

SBI's non-interest income (which includes Rs908 crore received on the sale of a 5 per cent stake in the National Stock Exchange) was up 44 per cent at Rs7,335 crore.

SBI chairman Arundhati Bhattacharya said proceeds from the stake sale have gone into bad loan provisioning. ''We have created almost Rs1,380 crore of additional provisions this quarter on account of this one-time income.''

The bank reported a 11.41 per cent growth in its loan book to Rs14,63,690 crore, driven by both higher retail and corporate advances.

Loan growth for the April-June 2016 quarter was, however, down Rs50,000 crore compared to the previous quarter. About half of this amount was converted into investment in commercial papers and non-convertible debentures.

Deposits increased 10.46 per cent to Rs17,82,371 crore. The low-cost current account, savings account deposits ratio improved from 41.70 per cent as of end-June 2015 to 42.78 per cent in end-June 2016.

Gross non-performing assets (GNPAs) jumped 80 per cent to Rs1,01,541 crore. GNPAs increased by Rs?3,368 crore during the reporting quarter. The GNPA ratio deteriorated to 6.94 per cent at end-June 2016 from 4.29 per cent at end-June 2015.

On NPAs, Bhattacharya said: ''We have an NPA trajectory in mind. The trajectory should look much better subsequent to the second quarter. The worst is behind us with the last quarter. But obviously, you know, it is not something that will just get shut off like a tap. Obviously, the denominator (loan growth) will also play a part.''