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Asset Quality improves: SBI net falls 40% to Rs 945 crore on low non-interest income

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India’s largest lender reported a 15.2% y-o-y fall in operating profit in Q2FY19 to Rs 12,344 crore.

State Bank of India on Monday reported a net profit of Rs 945 crore in the September quarter of FY19, more than 40% lower on year-on-year (y-o-y) basis, as non-interest income fell 26% y-o-y to Rs 7,814.5 crore.

India’s largest lender reported a 15.2% y-o-y fall in operating profit in Q2FY19 to Rs 12,344 crore. SBI’s net interest income — the difference between interest earned and interest expended — rose 12.5% y-o-y to Rs 20,906 crore and the domestic net interest margin fell seven basis points sequentially to 2.88%. The lender’s capital adequacy ratio fell 22 bps sequentially to 12.61% in Q2.

SBI’s asset quality improved in the September quarter, with gross NPAs as a percentage of gross advances declining 75 bps sequentially to 9.95%. The net NPA ratio also fell 45 bps quarter-on-quarter (q-o-q) to 4.84%.

SBI chairman Rajnish Kumar on Monday said that of Rs 3,189 crore of corporate slippages, 75% has come from the watchlist. “The watchlist is now at Rs 20,359 crore, down from Rs 22,289 crore at the end of June,” he said. Shares of SBI rose as much as 5.06% on BSE in intra-day trade on Monday, before ending at Rs 295.30, up 3.45%.

SBI has an exposure of Rs 31,066 crore to the accounts from the RBI first list that remains unresolved after being referred to the NCLT and the total provision on those accounts stood at Rs 19,882 crore.

As for the accounts named in the second list, it now has an exposure of Rs 22,309 crore, while the provisions against it stand at Rs 17,401 crore.

In Q2FY19, of the total slippages of Rs 10,725 crore into the bad-loan category, Rs 7,536 crore originated from the retail and small and medium enterprises (SME) portfolio. “On the SME side, the number is slightly higher. One reason is that the RBI has given a dispensation to consider SME accounts as NPA after a period of 180 days instead of 90 days. In the last quarter, we had taken a hit of about Rs 1,200 crore on account of SME. So if you take some of this and move it to the previous quarter, it is not much of an increase,” Kumar said. SBI’s NPAs in the SME segment stood at Rs 27,124 crore at the end of September, up from Rs 25,059 crore at the end of June.

Recoveries and upgradations in Q2FY19 stood at Rs 4,327 crore. SBI reported domestic loan growth of Rs 11.11% y-o-y to Rs 17.78 lakh crore in Q2FY19 and its total deposits grew 7.02% y-o-y to Rs 28.07 lakh crore in the same period.

While the bank’s corporate and SME loans grew 14.3% and 5.24% y-o-y, respectively, its retail personal loans grew 14.23% y-o-y to Rs 5.76 lakh crore. “The expectation or the guidance we have given is of 10-12%. We are pretty much on course to achieve that target,” Kumar added.

SBI’s current account savings accounts (CASA) ratio improved 39 bps y-o-y to 45.27% as on September 30. In absolute terms, domestic CASA deposits grew 8.19% y-o-y to Rs 12.27 lakh crore.

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