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.