SBI Q3 net doubles to Rs 2,610 cr, first rise in five quarters

NPA provisions decline but gross bad loans as a percentage of total loans rose slightly to 7.23%

State Bank of India (SBI), the country's largest lender, has posted a 134 per cent rise in net profit at Rs 2,610 crore in the December quarter, predominantly on a hefty rise in sale of

investments (securities) and revenues from part-stake sale in its life insurance subsidiary.

It had a net profit of Rs 1,115 crore in October-December 2015. The share closed flat at Rs 276 on the BSE. 

Net interest income rose by 7.6 per cent to Rs 14,751 crore. The net interest margin (domestic) declined by 19 basis points (bps) over a year to 3.03 per cent. And, down two bps sequentially from 3.05 per cent at end-September. These were impacted by low credit growth and easing of lending rates.

SBI chief Arundhati Bhattacharya said the NIM might decline further by five to six bps by end-March.

Other income -- fees, commissions, treasury, etc -- rose 58.7 per cent from Rs 6,087 crore a year before to Rs 9,662 crore. Profit on sale of investments grew 221 per cent to Rs 3,969 crore. The non-interest income included profit from sale of a 3.9 per cent stake in SBI Life Insurance, for Rs 1,755 crore. 

The provision for non-performing assets (NPAs) declined to Rs 7,244 crore, from Rs 7,644 crore in the same quarter of FY16. Sequentially, too; it had set aside Rs 7,669 crore for NPAs in the quarter ended September. The provision coverage ratio (PCR) improved sequentially to 62.87 per cent, from 62.12 per cent at end-September but was lower than 65.23 per cent at the end of December 2016. 

Gross NPAs were Rs 1,08,172 crore (7.23 per cent). Slippage of loans into NPAs was Rs 2,390 crore, from Rs 105,782 crore in the September quarter. Its 'watch list' of stressed corporate loans was Rs 17,992 crore, down from Rs 34,776 crore at end-March. Bhattacharya said chunkier pieces of stressed units were

out of the way. Stress in the system would reduce only when demand in the system picked up. 

Reflecting a surge after demonetisation, the share of low-cost deposits – current account and savings account – rose to 46.55 per cent of the total, from 42.74 per cent at end-September. It was 42.7 per cent a year before.

The total of deposits rose 22.1 per cent to Rs 20,40,778 crore.

Gross advances rose 4.8 per cent over a year, to Rs 14,97,164 crore. With upturn in demand, the bank expects to grow credit by 11 per cent in 2017-18, said Bhattacharya.

The capital adequacy ratio was 13.73 per cent, with tier-I capital at 10.65 per cent. SBI will keep capital raising plans on hold till the merger of associate banks.