SBI's insurer stake sale lifts net to ₹1581.55 cr

SBI Q2 net profit drops 37% to Rs 1581.5 crore due to higher provisions

SBI Q2 net profit drops 37% to Rs 1581.5 crore due to higher provisions

Robust growth in other income coupled with contained operating expenses helped State Bank of India report a net profit of ₹1,582 crore in the second quarter against a net loss of ₹557 crore in the year-ago quarter.

The country's biggest lender had registered a profit after tax of Rs 2,006 crore in the corresponding period of the last fiscal, the bank said in a stock exchange filing here.

Of the total provisioning, that on account of loan losses was Rs 16,715 crore.

"Sharp fall in fresh slippages has positively surprised us, as we were projecting slippages of about ₹15,500 crore" for the second quarter, Reliance Securities wrote in a note to clients.

In a sign that the pressure on asset quality is easing, fresh slippages in the reporting quarter were about a third of what they were in the preceding quarter. That ratio eased to 9.83 percent at end-September, while the additions to bad loans during the quarter was almost a third of the rise in the previous three months.

Gross non-performing assets (as a percentage of gross advances) were lower at 9.83 percent in Q2 against 9.97 percent in Q1 and net NPAs (as a percentage of net advances) were also lower at 5.43 percent against 5.97 percent QoQ.

However, the provision coverage ratio improved to 65.1%, an increase of 431 bps from June 2017. "The rate at which the slippage ratio has started coming down, we are hopefully in for some good times", Kumar said.

Other income, including an exceptional one-time income arising from the sale of part stake in SBI Life Insurance, jumped 58 per cent to ₹16,016 crore.

The drop came after the bank's bad loans had climbed since SBI merged its five subsidiary banks with itself earlier in the year. Hence, annualised slippage ratio declined to 1.85 percent versus 5.38 percent QoQ, he added.

The banking sector faces a rise in provisions for loan losses after a central bank order to cover at least 50 percent of the loans to companies being sent to bankruptcy court.

Domestic net interest margin rose 9 basis points over the previous quarter to 2.59 per cent.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.