Healthy fee income and a drop in bad loans helped the country’s largest lender, State Bank of India, to post a 10 rise in net profit in the April-June quarter at ₹3,692 crore.

Net interest income, the difference between interest earned and interest expended, increased marginally by 4 per cent, while non-interest income (including income from trading profits and fees) rose 19 per cent to ₹5,088 crore.

Fresh slippages from standard to bad loans during the quarter stood at ₹7,318 crore, down from ₹9,932 crore in Q1 FY15.

“The main slippages were in the retail and agriculture segments. The sequential increase in slippages was a seasonal impact. But year-on-year they have been coming down,” said Arundhati Bhattacharya, Chairperson, SBI.

The bank’s asset quality improved with gross bad loans or non-performing assets (NPAs) declining to ₹56,420 crore against ₹60,434 crore a year ago. Gross NPAs as a percentage of total loans fell to 4.3 per cent (4.9 per cent a year ago).

“Slippage from restructured assets was only 8.6 per cent… Going forward, recoveries (of bad loans) will be better or at least equal to earlier times,” Bhattacharya said.

Bhattacharya added that credit growth is not happening since there is a lot of weakness in commodity prices, input and energy prices. “We will transmit rates only when credit growth picks up,” she said.

The SBI chief added that deposit rates will get re-priced over the next nine months.

She expects credit growth to be around 14 per cent and deposit growth at 14-15 per cent in FY16.

Consolidated results On a consolidated basis, SBI posted a 6 per cent rise in net profit at ₹4,714 crore in the first quarter (₹4,448 crore in the year-ago quarter).

On Tuesday, SBI shares ended at ₹269.30 apiece, down 4.87 per cent on the BSE.

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