SBI Q4 net doubles to Rs2,815 cr on lower provisioning

State Bank of India (SBI), the nation's top lender, saw its fiscal fourth quarter net profit more than double to Rs2,815 crore, helped by a narrowing of provisioning. The bank said its overall provisions were lower by 11 per cent at Rs11,740 crore.

For the whole of fiscal 2016-17, net profit of SBI Group - banking and non-banking subsidiaries - however, declined to Rs241 crore from Rs12,225 crore in FY16.

SBI's gross bad loans as a percentage of its loan book improved to 6.9 per cent as of March from 7.23 per cent in December because fresh slippages fell to Rs9,755 crore from Rs10,185 crore.

The bank saw its bad loan provisioning soar in the year-ago quarter because of a higher allocation for non-performing assets following the RBI-directed asset quality review (AQR).

SBI said its asset quality improved in the January-March 2017 quarter, with gross NPAs as a percentage of gross advances falling 33 bps sequentially to 6.9 per cent. Net NPA ratio also declined by 53 bps quarter-on-quarter.

Recoveries in Q4 FY17 stood at Rs1,203 crore and the bank also upgraded loans worth Rs1,002 crore from non-performing to standard.

''The accretion of NPAs seems to be slowing,'' SBI chairman Arundhati Bhattacharya said on Friday, hinting progress at keeping stressed assets in check.

SBI said its operating profit for the fourth quarter rose 13 per cent year-on-year to Rs16,026 crore.

Net interest income, which is the difference between interest earned and interest expended,  of the bank grew 17.34 per cent year-on-year to Rs18,071 crore while its net interest margin - the key measure of profitability – fell 16 basis points (bps) to 3.11 per cent.

SBI's capital adequacy ratio (CAR) fell 1 basis point sequentially to 13.11 per cent in Q4. Bhattacharya observed that while the Reserve Bank of India (RBI) had eased norms for decision-making at the Joint Lenders Forum (JLF), it was difficult to say to what extent this would help. ''The rules were eased as it was found many of the smaller banks, or perhaps one or two of the bigger banks, were dragging their feet,'' she explained.

In Q4FY17, of the total slippages of Rs9,755 crore into the bad loan category, 13 per cent originated from the restructured book. In Q4FY16, SBI had created a watch-list of accounts worth Rs31,352 crore and expected 70 per cent of it to slip into the non-performing category in a worst-case scenario. The list stands at Rs 13,310 crore following fresh slippages in the March quarter. However, the post-merger watch-list stood at Rs 32,427 crore as on April 1. Following the merger, the bank has more power loans as part of its watch-list at Rs 11,075 crore, almost five times its standalone loans in the March quarter.

SBI reported loan growth of Rs 7.8 per cent to Rs16.27 lakh crore in Q4 FY17 while its total deposits grew 18.14 per cent to Rs2,044,000 crore in the same period. Corporate loans grew 3.59 per cent while its investment in corporate bonds rose 45 per cent to Rs59,636 crore and investment in commercial papers more than quadrupled on a y-o-y basis to Rs58,651 crore.

From the June quarter of FY18, the bank would announce its consolidated results since the merger is effective 1 April. ''In respect of the merger of the associates, we have ensured that we have taken the maximum pain so that going forward we can give much better results. And towards that end, the entire corporate book has been fully aligned,'' Bhattacharya said, adding that voluntary retirement scheme (VRS) expenses that come within Q4 to the extent of 75 per cent of the estimated expenses have already provided for.

Ahead of the results, shares of SBI rose as much as 4 per cent on the BSE in intra-day trade on Friday. The stock ended at Rs276.26, up 0.15 per cent. The SBI stock has gone up 23.4 per cent so far in the current fiscal against a 14.42 per cent rise for the Sensex in the same period last fiscal.