SBI net profit up 6%, says asset quality woes behind it

Country's largest lender SBI today reported a 5.97 per cent rise in its consolidated net profit at Rs 4,714 crore in the quarter to June, helped by lower bad loan provisioning and healthy rise in other income.
On standalone basis, net profit rose by a higher 10.25 per cent at Rs 3,692 crore, driven by a robust jump in treasury and investment income that rose 19.66 per cent to Rs 5,088 crore, out of which fee income contributed Rs 3,202 crore, up 12.86 per cent.
SBI Chairperson Arundhati Bhattacharya sounded optimistic on the asset quality front, saying the worst is sort of behind the bank.

"Overall, the stress picture is much better and with some amount of confidence I can say the recovery is having a beneficial impact in the books," she told reporters while announcing the numbers.
While loan loss provisions fell by 14 per cent to Rs 3,359 crore from Rs 3,903 crore last year, total provisions increased marginally by 1.31 per cent to Rs 5,510 crore from Rs 5,439 crore in the year-ago period, she said.
Chief financial officer and deputy MD Anshula Kant attributed the good set of numbers to "the growth in net interest income which rose 3.6 per cent, other income has gone up by 20 per cent and also as on lower loan loss provisions."

Explaining the improvement in the asset quality, the chairperson said, "on a year-on year basis the slippages have come down. Now, we need to understand what is the quality of slippages. For the first time, we are seeing mid-corporate slippages very much under control. Main slippages that have occurred during the quarter is mainly in the retail area".
Kant said domestic net interest margin (NIM) declined to 3.29 per cent from 3.54 per cent due to reduction in base rate by 30 basis points, and also because of subdued loan growth of 5.38 per cent system level NIM came down by 14 bps to 2.99 per cent.