Mumbai: The country's largest lender State Bank of Indias second-quarter (July-Sept) profit more than trebled pushed by the sale of stake in its life insurance subsidiary to Rs 3,102 crore and better asset quality and management. "Exceptional items represent net profit of Rs 3,190.97 crore on sale of partial investments in SBI Life Insurance Company Ltd.
Consequently, the holding of SBI in the subsidiary reduced to 75.9% from 62.1%," SBI said. Buoyed by the result, SBI share price was up 282.35. The largest lender also posted an improvement in its asset quality, amidst concerns over fresh weakness in corporate credit quality.
Net profit rose 218% on a yearly basis to Rs 3,012 crore in the quarter ended September, according to an exchange filing as well as statement by India's largest public sector bank.
Profit growth though has come on a low base as SBI's bottom line had taken a hit a year ago as it had to provide for bad loans or NPAs.
Net interest income, or the core income of the lender or for any bank, rose 17% year-on-year to Rs 24,600 crore, surpassing the Rs 23,075-crore estimate. Net interest margin improved to 3.22% from 3% sequentially.
The most soothing factor for SBI was that the asset quality has improved with gross non performing assets falling by Rs 6,827.89 crore to Rs 1,61,636 crore from June.
Gross slippages declined to Rs 8,805 crore from Rs 16,212 crore in the previous quarter, by 50%. SBI chairman Rajnish Kumar, however, warned that a large stressed nonbank lender has not yet fallen into the NPA category and could add to stressed assets in subsequent quarters. He did not name the lender.
GNPA ratio decline to 7.19% from 7.53%, while the net NPA ratio fell to 2.79% against 3.07% as of June. Provisions for bad loans fell 5% quarter-onquarter to Rs 11,040 crore, but rose 8% over a year earlier.
The lender's provision coverage ratio (PCR) stood at 81.23% versus 79% in the previous quarter. Recovery/upgradation was at Rs 3,931 crore in Q2 compared to Rs 5.769 crore in the previous quarter.
But there are three large accounts which are at an advanced stage of resolution with expected recovery of about 62%. Credit cost for the quarter declined 8 basis points to 1.97%. Gross slippages will not exceed 2% even in worst scenario, Kumar said.
