State Bank of India (SBI) reported a 3.3 per cent rise in its net profit at Rs.3,349 crore for the first quarter of 2014-15. Significantly, this is the first growth in net profit recorded by the bank in the last six quarters and the growth was aided by higher net interest income which grew 15.1 per cent to Rs.13,252 crore.
Total interest income during the period rose 15 per cent to Rs.36,487 crore with interest on advances up 15.57 per cent at Rs.27,560 crore and interest income on resource operations up 15.73 per cent at Rs.8,649 crore. Net interest income rose by 15.12 per cent to Rs.13,252 crore while non-interest income fell by 4.97 per cent to Rs.4,252 crore.
Domestic net interest margin (NIM) rose 10 basis points to 3.54 per cent and the capital adequacy ratio as per Basel III is 12.33 per cent.
The bank’s operating expenses were up 3.34 per cent at Rs.8,717 crore while the operating profit rose 16.37 per cent to Rs.8,788 crore during the quarter. Gross non-performing asset (NPA) ratio dropped 66 basis points to 4.9 per cent while net NPA ratio fell to 2.66 per cent (2.83 per cent).
The bank’s deposits rose 12.85 per cent to Rs.14,18,915 crore during the quarter with Savings Bank deposits up 11.58 per cent at Rs.4,89,422 crore.
Gross advances were up 12.52 per cent at Rs.12,32,288 crore while the credit deposit ratio declined 90 basis points to 77.9 per cent.
According to Saday Sinha, banking analyst, Kotak Securities, “Net interest income came a shade above our expectations on the back of better than expected margin. Non-interest income was lower on the back of subdued trading gains (Q1 2013-14 was exceptional quarter), however, controlled opex (almost flat) and write-back of Rs.550 crore of depreciation helped in mitigating the impact of higher NPA provisions (72 per cent).”
Further, he said the reported headline NPA remained stable at 4.9 per cent, despite higher slippage on the back of higher cash recovery, upgradation and write-offs. “Nonetheless, fresh impairment remained lower at Rs.13,500 crore as against the run-rate of Rs.16,550 crore seen during previous four quarters.”
On the Bombay Stock Exchange, SBI stock reacted by 0.9 per cent to close the week at Rs.2,415.25.