State Bank of India (SBI) reported a net profit of Rs.2,375 crore for the second quarter ended September 30, 2013, as compared to Rs.3,658 crore recorded in the second quarter of 2012-13.

However, net interest income (NII) increased from Rs.10,974 crore to Rs.12,251 crore, a year-on-year growth of 11.64 per cent.

The drop in profit is due to, “investment depreciation, staff expenses which have gone up very sharply and we have to provide 15 per cent extra for the pending wage negotiation. There is quite a high provision in pension expenses,” said SBI chief Arundhati Bhattacharya, here on Wednesday while addressing a press conference.

Gross NPAs increased to 5.64 per cent in September 2013 from 5.15 per cent in September 2012. Net NPAs also increased from 2.44 per cent to 2.91 per cent.

However, the bank said that fresh NPA slippages declined by 39.23 per cent sequentially in the second quarter of this fiscal, and net accretion to NPA was down by 65.83 per cent at Rs.3,315 crore.

NPA’s had come from mid-cap and larger of the SMEs, said Ms. Bhattacharya, adding, power, iron and steel and infrastructure had been contributing to NPAs. She also said accounts worth Rs.6,000 crore were there in the restructuring pipeline. “Not all of this will go into corporate debt restructuring in the third quarter. It could get spread over to the fourth quarter and the first quarter of the next fiscal.

“There is a lot of stress in the mid-corporate and the SME side. We are trying to capture the early warning signals and push them into restructuring to ensure that accounts do not get into more severe trouble,” Ms. Bhattacharya added.

Domestic net interest margin increased to 3.51 per cent for the second quarter of the current financial year from 3.44 per cent in the corresponding period of the previous fiscal.

The current account and savings account (CASA) ratio at end-September 2013 was 43.58 per cent with Savings Bank deposits touching an all time high of Rs.4,45,443 crore.

Total deposits increased from Rs.11,33,644 crore to Rs.12,92,456 crore, a growth of 14.01 per cent while gross advances from Rs.9,56,000 crore to Rs.11,39,326 crore, a growth of 19.18 per cent year-on-year. Credit deposit ratio (domestic) increased from 76.64 per cent to 80.54 per cent.

Ms. Bhattacharya said that the bank was looking at raising capital in the range of Rs.8,000-9,000 crore, “more than what the government has given us”. “We have applied to the government and sought their approval” she said adding, that the bank was expecting to enter the market by the end of this fiscal year through the “best window available.”

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