State Bank’s profit trebles on one-time gain

The second quarter net profit of State Bank of India (SBI) has more than trebled to Rs. 3,012 crore for the quarter ended September 30 from the Rs. 945 crore recorded in the year-earlier period, mainly due to one-time gain from stake sale in its life insurance arm.

There was a gain of Rs. 3,484.30 crore from sale of 4.5% stake in SBI Life Insurance Company during the quarter.

Net interest income rose 17.7% to Rs. 24,600 crore while net interest margin improved 42 basis points (bps) to 3.22%. Non-interest income increased 28.2% to Rs. 12,023 crore for the quarter.

“The bank has shown all-round improvement in the performance,” said Rajnish Kumar, chairman, SBI during the post earnings media interaction.

“[The] bank’s focus has been on improving the core pre-provision operating profit. There also, the results are visible. This creates resilience to absorb any shock in the asset quality,” he said.

With slippages falling to Rs. 8,805 crore in Q2 compared with the Rs. 10,725 crore a year ago, the bank’s asset quality has improved.

Gross NPA ratio was at 7.19%, down 276 bps year-on- year and 34 bps sequentially. In absolute terms also, gross NPA has declined both on a year-on-year basis as well as sequentially. Loan loss provisions increased 8.4% to Rs. 11,041 crore.


Mr. Kumar said the entire proceeds from the stake sale in the life insurance arm was used for provisions in two areas — one, stressed housing finance company (HFC) and two, in the power sector.

SBI has provided Rs. 900 crore for the stressed HFC, that is not an NPA.

The bank has an exposure of Rs. 7,000 crore towards the company. In the previous quarter, SBI had provided Rs. 500 crore for the same HFC.

Mr. Kumar said the provision coverage ratio of SBI is 81% and excluding advances under collection accounts, it is over 62%. Commenting that the bank had been taking measures to add ‘strength and resilience’ to the balance sheet, Mr. Kumar said, “If I call it the Safest Bank of India, I will not be exaggerating.”

“The long-term trend of the performance of the bank is in the right direction.”

Domestic credit grew 8.43% year-on-year, which was mainly driven by retail advances, where the growth was 18.9%.

While some of the private banks that have announced their earnings so far have taken a one-time hit on deferred asset tax (DTA) due to change in corporate tax rate from 35% to 25%, SBI said the bank will make the adjustment during the course of the financial year.

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