The bad loans story is already over, says Chaudhuri

State Bank of India (SBI) reported a net profit of Rs.3,658 crore for the quarter ended September 30, 2012, up 30.16 per cent as compared to Rs.2,810 crore in the corresponding period of the previous year.

As the bank had excess liquidity amounting to Rs.70,000 crore, it would go slow on deposit mobilisation to hold up the net interest margin, which edged down to 3.34 per cent in the July-September quarter from 3.81 per cent in the year-ago period, said Pratip Chaudhuri, Chairman, SBI, while addressing a press conference here.

The profit in July-September 2012 was boosted by a steep 37 per cent drop in provisions for NPAs at Rs.1,837 crore against Rs.2,921 crore a year ago, as the bank had made higher provisions in the previous quarter.

Total income rose 12 per cent to Rs.32,953.47 crore from Rs.29,394.32 crore a year ago.

“The (higher) net profit can be attributed to lower provisioning and also better management of the credit portfolio,” Mr. Chaudhuri said.

The current liquidity level will support loan expansion in the second-half of the year, according to Mr. Chaudhuri. He also said that next week the bank would take stock of the net interest income figure for October to take a call on cutting lending rates.

Total interest income increased from Rs.26,027 crore to Rs.29,607 crore, a growth of 13.75 per cent. Net interest income increased from Rs.10,482 crore in the second quarter of previous fiscal to Rs.10,974 crore in the second quarter of current financial year, a rise growth of 4.69 per cent. Operating expenses increased from Rs.6,375 crore to Rs.6,967 crore and staff expenses from Rs.4,145 crore to Rs.4,280 crore.


Deposits of the bank increased from Rs.9,73,171 crore in September 2011 to Rs.11,33,644 crore in September 2012, a growth of 16.49 per cent. Savings Bank deposits increased from Rs.3,52,408 crore to Rs.3,96,543 crore.

Gross advances increased from Rs.8,10,612 crore in September 2011 to Rs.9,56,000 crore in September 2012, up 17.94 per cent.

The demand for term and project loans had almost dried up even as deposits accretion had been robust in the first-half of the current financial year, said Mr. Chaudhuri.

Credit deposit ratio (domestic) increased from 75.81 per cent in September 2011 to 76.64 per cent in September 2012, an increase of 83 basis points.

Gross NPAs increased to 5.15 per cent in September 2012 from 4.19 per cent in September 2011. Net NPA also increased from 2.04 per cent to 2.44 per cent. Mr. Chaudhuri said the bank had curtailed loan expansion in the mid-corporate and small and medium enterprise segments due to increase in delinquencies.

However, the SBI chief said “The bad (loans) story is already over.” Going forward, he said, “not much pain to come.”

Keywords: SBIQ2 earnings

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