SBI reports Rs2,312 cr Q1 net on lower bad loan provisioning
05 August 2019
State Bank of India (SBI), the country’s largest lender, has reported a standalone net profit of Rs2,312.20 crore for the quarter ended 30 June 2019, as against a loss of Rs4,875.85 crore in the same quarter of the previous fiscal.
On a quarter-on-quarter basis, SBI said, it profit jumped 176 per cent compared with Rs838.40 crore in the March quarter, on the back of lower provisioning.
However, the bank saw a sharp rise in fresh loan slippages.
While higher other income and operating income also boosted profitability, tepid net interest income (NII) growth limited profits. Net interest income grew 5.2 per cent year-on-year (y-o-y) to Rs22,938.8 crore in June quarter 2019, with loan growth of 13.8 per cent on a y-o-y basis.
Significantly, gross non-performing asset (NPA) ratio fell to 7.53 per cent of advances, down 316 basis points from 10.69 per cent in June last. Gross NPAs in absolute terms fell both sequentially as well as y-o-y basis. Gross NPAs stood at Rs168,494 crore in June 2019 against Rs212,840 crore a year ago. However, fresh slippages rose sharply to Rs16,212 crore this June, from Rs9,984 crore a year ago and Rs7,505 crore in March quarter.
SBI Chairman Rajnish Kumar said the subdued growth in credit has made it difficult to increase the bank’s net interest margins (NIM), a key indicator of the bank’s profitability. Gross NPA ratio, however, declined to 7.53 per cent of advances, down 316 bps from 10.69 per cent in June 2018. Gross NPAs in absolute terms declined both sequentially as well as year-on-year basis.
“Every quarter I am looking at the sky and praying to God that the three large NCLT accounts stuck in the middle of resolution get resolved. These alone will give us Rs16,000 crore write-back,” Kumar said.
Kumar said one regular account of a Maharatna company which became NPA of another bank further impacted the gross slippage. Another account failed to successfully implement the resolution plan, adding Rs2,000 crore to the slippages, he said. It has made Rs1,200 crore provision on standard account of a stressed housing finance company.
According to SBI, 453 accounts with outstanding of Rs113,809 crore have been admitted to NCLT.
Accounts under the two lists have a fund-based outstanding of Rs 38,741 crore.
“Three accounts are in an advanced stage of resolution with expected recovery of 62 per cent. Post June 7 RBI circular, 46 accounts (24 NPA and 22 standard) were eligible for signing ICA (inter-creditor agreement), of which six NPAs filed/admitted in NCLT and two standard accounts have since been regularised,” the bank said.
Bad loans in the agriculture portfolio rose to Rs26,298 crore (13.08 per cent of advances) in June 2019 from Rs21,830 crore (11.60 per cent) a year ago. The agriculture portfolio in just one state contributed around Rs2,000 crore to slippages in the wake of debt waiver issues.
On the auto sector, which is now facing a slowdown, SBI said it has an exposure of Rs11,500 crore, but clarified that there was no risk of concentration of stress. It said that robust domestic credit growth at 11.89 per cent was driven by both retail (18.68 per cent growth) as well as high rated corporates (11.62 per cent). Domestic net interest margin rose to 3.01 per cent in Q1 of FY20.