SBI returns to profit on better asset quality

Mumbai: Lower provisions and higherinterest income helped State Bank return to the black during the first quarter ending June with a net income of Rs 2,312 crore as against a net loss of Rs 4,876 crore a year ago. The largest lender said its provision plunged a full 35% to Rs 10,934 crore for the reporting period from Rs 16,849 crore, helping the bottomline. A further boost came from higher net interest income which grew 5.23% to Rs 22,939 crore from Rs 21,798 crore. This was on the back of a marginal increase in domestic net interest margin to 3.01% from 2.95%.

Overall asset quality improved massively boosted by a dip in both the gross non-performing loan ratio to 7.53 from 9.95 as well as the net NPA ratio to 3.07 from 4.84%. Despite a good numbers, the street did not take the numbers positively, primarily due to higher slippages. The SBI counter lost nearly 3% at Rs 308.45 on the BSE after the result announcement against a gain of 0.3% gain on the benchmark.

"This is the fourth consecutive quarter profitable growth for us. It is building up gradually. If we analyse the numbers, the overhead and staff cost is under control and also there is a decline in the cost-to-income ratio at 2.03%, down 52 bps annualized," chairman Rajnish Kumar said.

He said the bank has been focusing on pre-provision operating profit and has been successful so far as operating profit grew 10.60% to Rs 13,246 crore.

"In the current scenario where credit growth is muted, I think it will be very difficult for us to push up the NIM in a very significant manner. We expect domestic NIM to be at 3.1% in FY20," Kumar said, adding he expects to close the fiscal with a 12% growth in loan sales.

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