SBI Q2 net down 35%, NPAs below market estimate

Decline is sharpest in the past eight quarters

State Bank of India (SBI) today said its net profit for the quarter ended September 30, 2013 fell by 35.1% from a year earlier to Rs 2,375 crore as it incurred more expenses and had to make higher provisions amidst deteriorating asset quality. This was the sharpest year-on-year decline in the bank's quarterly profit in the past eight quarters.

 

Net interest income, or the difference between interest income and interest expense, was at Rs 12,251 crore in July-September period, up 11.6% from a year earlier. The bank's domestic net interest margin improved by seven basis points sequentially to 3.51% during the three-month period.

 

The country's largest lender saw its operating expenses increased to Rs 9,218 crore during the second quarter from Rs 6,967 crore a year earlier. The rise in operating expenses was on account of higher staff cost and increase in overheads.

 

SBI made a provision of Rs 3,937 crore in July-September period compared to Rs 3,696 crore a year ago. Loan loss provisions increased almost 44% year-on-year to Rs 2,645 crore. Gross non-performing asset ratio deteriorated by 49 basis points from a year earlier to 5.64%, while net bad loan ratio increased by 47 basis points to 2.91% at the end of September, 2013.

 

The bank, however, said fresh slippages declined by 39.2% sequentially, while net accretion to non-performing assets was down by 65.8%. 

 

Gross advances increased by 19.2% year-on-year to Rs 1,139,326 crore, while deposits were up 14% from a year earlier to Rs 1,292,456 crore at the end of the quarter. The credit deposit ratio was at 80.54%.

 

The bank closed the quarter with a capital adequacy ratio of 11.69% as per Basel III norms. Its tier I ratio was 8.73%.

 

At 1:45 pm, SBI shares were traded at Rs 1,710 on the National Stock Exchange (NSE), up 2.2% from previous close.