Economy

SBI shares zoom 8% on Q2 net profit

SBI shares zoom 8% on Q2 net profit

Slippages were under control, as gross non-performing assets (GNPA) declined sequentially from Rs 188,068 crore to Rs 186,115 crore at the end of Q2FY18.

The bank set aside Rs 16715 crore for bad loans mainly after it made bumper gains of Rs 5,436 crore by selling 8% stake in SBI Life Insurance in the second quarter. NII increased 27.3 per cent to Rs 18,585.9 crore in Q2 from Rs 14,600.2 YoY.

The Kolkata-headquartered bank had registered a net profit of Rs 65.03 crore in the July-September quarter of the previous financial year. The stock market reacted positively to the improvement in asset quality. Kumar said with worldwide reporting norms on the anvil, the bank was making provisions closer to expected losses (on bad loans) than actual loans. Other income for the quarter on review went up 28.1 percent to Rs 10,579.91 crore from Rs 8,261.44 crore in the same quarter past year.

SBI's effort to improve its balance sheet quality cheered investors, with the shares climbing 6.2% to close at ₹333.20 on the BSE on Friday. The insurance venture had held an initial public offering during the second quarter, helping SBI partly dilute its holding in the insurer.

State-run lenders account for the bulk of Indian banks' soured loans which were at a record 9.5 trillion rupees as of June. "The bank has taken front loaded provisions on the NCLT related account is a very positive sign". Similarly, the net NPAs rose to 5.43 per cent from 4.19 per cent.

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Gross NPAs' ratio fell to 9.83 per cent from 9.97 per cent in the last quarter, while the net bad loan ratio decreased relative to the previous quarter to 5.43 per cent from 5.97 per cent.

The company declared its September 2017 quarter results on November 10, 2017, posting a revenue decline by 3% and net profit declined by 62.1% as compared to corresponding quarter in the previous year.

Kumar does not expect credit growth to improve significantly in the second half of the current year. The bank would fovus on small and micro industries, agriculture and retail. "Corporate credit for the next two quarters will remain muted because even the infrastructure spends undertaken by government will come with a time-lag", said SBI chief.

"We will hopefully recover more and bring down retail NPAs to Rs 50,000-51,000 crore".

Its capital adequacy ratio (CAR) stood at 13.56 per cent with tier-I of 10.96 per cent at the end of September 2017.


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