MUMBAI: The State Bank of India returned to profits in the July-September quarter (Q2) after three quarters of losses. SBI chairman Rajnish Kumar on Monday asserted that the worst is over for the banks, and that most second quarter results from public sector banks, barring two or three, have been encouraging. “SBI’s profit may be modest, but there is no looking back. The number is going to get bigger and bigger hereafter,” Kumar told reporters in a conference call.
SBI’s net profit for the September quarter came in at Rs 945 crore, compared to a profit of Rs 1,582 crore a year ago and a loss of Rs 4,876 crore in the June quarter. Higher credit growth and lower slippages (amount of loans getting classified as NPAs) led to the improvement in net interest margins, the bank said. The bank’s operating profit fell 30.47 per cent to Rs 13,905 crore on lower trading income, and also on one-time income earned a year ago on partial stake sale in SBI Life. [Click and drag to move]
Its net interest income rose 12.48 per cent to Rs 20,906 crore. SBI reported a 11.11 per cent growth in domestic credit to Rs 17,78,321 crore – the bank is well on course to meet its guidance of 10-12 per cent credit growth for the year, Kumar said. Overall growth in deposits was 7 per cent on year to Rs 28,07,420 crore. SBI’s gross NPAs (non-performing assets) fell to Rs 2,05,864 crore from Rs 2,12,840 crore on Q1FY18, and net NPAs declined to Rs 94,810 crore from Rs 99,236 crore. Gross NPA ratio fell 0.74 per cent to 9.95 per cent and net NPA ratio by 0.45 per cent to 4.84 per cent.
“There is all-round improvement. We have complete control on the demon of NPAs,” Kumar said. On the announced purchase of NBFC loan portfolios from the non-banking finance companies, Kumar said SBI had in October alone bought NBFC loans worth Rs 5,250 crore, and another Rs 15,940 crore worth of loan purchases is on the pipeline. The bank hopes to achieve the target of Rs 45,000 crore by March. On giving credit enhancement to NBFCs, another lifeline RBI had announced for the sector under liquidity constraints, Kumar said, “Wherever we are comfortable in buying NBFC loans, we will be comfortable on providing credit enhancement facility.
We need to obtain a clarification on the capital adequacy requirements”. He said SBI has an outstanding amount of loans worth Rs 1.5 lakh crore to NBFCs, which includes all the top-rated housing finance and other NBFCs. As far as the IL&FS group exposure is concerned, Kumar said there is a Rs 4,000 crore exposure to 13-14 SPVs and Rs 250 crore to the holding company, apart from equity investments of Rs 92 crore. Of this, Rs 50 crore has been classified as NPA on technical grounds, and Rs 56 crore provisions made, he said. “We will support the Uday Kotak-led Board of IL&FS,” Kumar said.