State Bank of India (SBI) on Monday swung to a profit after three quarters of loss, helped by a one-time gain and lower provisions. The bank reported a net profit of ₹945 crore for the three months ended 30 September from a loss of ₹4,876 crore in the preceding three months. Profit declined 40% from ₹1,582 crore in the year-ago period. The Q2 profit, however, beat the ₹439.2 crore estimate of 14 analysts in a Bloomberg survey.
The bank would have posted yet another quarter of loss had it not reported a one-time gain of ₹1,087 crore from sale of investment in the merchant banking business and ₹473 crore from a stake sale in insurer SBI General Insurance.
The bank’s gross non-performing assets (NPAs) rose 10.6% to ₹2.06 trillion in Q2 against ₹1.86 trillion in the year-ago quarter. However, as a percentage of total advances, gross NPAs improved on a sequential basis to 9.95% at September-end compared with 10.7% in the previous quarter.
The bank reported slippages worth ₹10,888 crore in the September quarter compared with ₹14,349 crore in the previous quarter. The slippage ratio, which is loans turning bad during the quarter, fell to 2% and was the lowest in six quarters, the bank said.
The increase in slippages was seen in the bank’s small and medium portfolio. The SME portfolio saw increased slippage as a dispensation provided by the Reserve Bank of India to these firms expired in the September quarter.
“Though the profit is modest, there is no looking back,” SBI chairman Rajnish Kumar said at the press conference. “From here on, this number will only be bigger and better. We have complete control over the demon of NPA,” Kumar said.
Provisions during the quarter dropped 36.8% to ₹12,092.17 crore against ₹19,137.43 crore in the year-ago quarter. In the April-June quarter, the bank had set aside ₹19,228.26 crore in provisions.
The bank said it expects some relief from the first list of accounts referred to the National Company Law Tribunal (NCLT). “We will see a ₹6,000 crore write-back from one of the NCLT-1 accounts,” Kumar said, referring to the Essar Steel resolution.
On the operational performance, the bank’s other income, which includes core fee income, dropped 26.1% to ₹7,814.50 crore during the September quarter, from ₹10,579.91 crore a year ago.
Domestic advances grew 11.1% with corporate loan portfolio growing at 14.3% over last year. Retail advances, including SME, agriculture and personal advances, grew 8.9%.
Kumar also said that the countries largest lender, which was handling most of the payments to Iran for oil purchases, is now complying with the US sanctions against Tehran.
“We are an international bank. We are based in the US. And for a bank which is present in the USA we will act strictly in accordance with the sanctions… We will comply with the sanctions,” Kumar said.
On Monday, SBI shares rose 3.45% to ₹295.30 on the BSE while the benchmark Sensex lost 0.17% to end the day at 34,950.92 points.