Money & Banking

SBI Q2 net zooms to ₹3,012 cr on one-time gain

Our Bureau Mumbai | Updated on October 25, 2019

Lifted by exceptional item of Rs 3,484 cr on account of partial sale of investment in life insurance arm

State Bank of India’s stock jumped 7.19 per cent on Friday to close at ₹281.60 apiece on the back of overall improvement in second quarter performance, with operating profit rising 31 per cent, net profit surging more than 200 per cent (albeit supported by one-time exceptional item), lower fresh slippages, and betterment in asset quality.

The standalone net profit of India’s largest bank jumped to ₹3,012 crore in second quarter ended September 30, 2019, against ₹945 crore in the year-ago period. The bottomline was buoyed by one-time exceptional item in the form of ₹3,484-crore inflow due to sale of partial investments in subsidiary SBI Life Insurance Company.

In a bid to make the balance-sheet more resilient to absorb shocks on the asset quality front, the bank has utilised the entire proceeds of the aforementioned partial divestment to make upfront provision of ₹2,600 crore towards exposure to a power company, whose restructuring failed, and ₹900 crore towards exposure to a mortgage lender, which is likely to turn non-performing in the third quarter, said Rajnish Kumar, Chairman.

Operating profit was up 31 per cent to ₹18,199 crore in the reporting quarter, against ₹13,905 crore in the year ago quarter. Net interest income was up 18 per cent to ₹24,600 crore in the reporting quarter, against ₹20,906 crore in the year-ago period.

Other income, comprising fee income, profit/loss on sale of investments, forex income, and miscellaneous income increased 9 per cent to ₹8,538 crore (₹7,815 crore in the year-ago quarter).

Fresh slippages at ₹8,805 crore during the reporting quarter were down 84 per cent vis-a-vis ₹16,212 crore in the preceding quarter. Kumar said the normal average quarterly slippages will be in the ₹8,000-8,500-crore range.

Loan-loss provisions were higher at ₹11,041 crore (₹10,815 crore). The SBI chief said the bank has projected a credit growth of 12-14 per cent in FY20. The bank’s domestic credit grew at 8.43 per cent year-on-year (y-o-y), mainly driven by retail-personal advances, which grew by 19 per cent y-o-y.



Published on October 25, 2019

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