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Robust growth in other income coupled with contained operating expenses helped State Bank of India report a net profit of ₹1,582 crore in the second quarter against a net loss of ₹557 crore in the year-ago quarter.
In a sign that the pressure on asset quality is easing, fresh slippages in the reporting quarter were about a third of what they were in the preceding quarter.
The year-on-year (y-o-y) improvement in the bottomline comes despite a 27 per cent increase in total provisions, including towards loans loss and standard assets, and muted overall loan growth.
The net profit of India’s largest bank in the reporting quarter (Q2FY18), however, is lower than in the first quarter (₹2,006 crore). In Q2 FY18, net interest income (difference between interest earned and interest expended) edged up 2.58 per cent y-o-y.
Other income, including an exceptional one-time income arising from the sale of part stake in SBI Life Insurance, jumped 58 per cent to ₹16,016 crore. The bank received ₹5,436 crore from the stake sale.
SBI Chairman Rajnish Kumar said growth in overall advances, especially corporate credit, was muted. However, retail loans continue to drive overall loan growth, he added.
Kumar underscored that his bank is not constrained by capital in growing its loan book. More capital support from the government is on the cards to support credit growth, he added.
Overall net interest margin (NIM) came down to 2.43 per cent in Q2 FY18 from 2.79 per cent in Q2 FY17. Kumar said he expects NIM to improve by 10-15 basis points going forward. Fresh slippages were lower at ₹9,026 crore in Q2 FY18 against ₹26,249 crore in the preceding quarter.
GNPAs as a proportion of gross advances improved to 9.83 per cent against 9.97 per cent in the preceding quarter. However, this was higher than 8.52 per cent in Q2 FY17.
Total provisions were higher at ₹18,418 crore (₹14,546 crore in Q2 FY17). Of this, loan loss provisions amounted to ₹16,715 crore (₹15,169 crore). B Sriram, Managing Director, said the one-time exceptional gain helped the bank make accelerated provisions, including towards standard assets and accounts that have been referred to the National Company Law Tribunal towards resolution.
Sriram said the bank has made almost 75 per cent of the provisioning required for the accounts in the second list of NCLT cases.
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