Mumbai: Country's largest lender State Bank of India today reported 31 percent jump in its net profit at Rs 3,100 crore in the September quarter, on account of improvement in interest income and tight control on expenses.
The bank had reported a profit after tax of Rs 2,375 crore in the year-ago period.
"Net profit is coming from the improved numbers as our interest income has gone up. Also, our expenses are very well controlled with overall operating expenses going up by 2.23 percent," SBI Chairman Arundhati Bhattacharya told reporters.
Total interest income grew 9.85 percent to Rs 37,263 crore in the quarter from Rs 33,922 crore.
Net interest income increased by 8.36 percent to Rs 13,275 crore in quarter from Rs 12,251 crore.
Operating expenses were up 2.23 percent to Rs 9,423 crore from Rs 9,218 crore.
Domestic net interest margins stood at 3.49 percent from 3.48 percent.
The bank saw improvement in the asset quality with gross NPA (non-performing assets) ratio at 4.89 percent as against 5.64 percent. Net NPA improved to 2.73 percent from 2.91 percent in the same period last year.
Fresh slippages in the quarter stood at 7,700 crore as against Rs 8,365 crore in the same period last year.
Bhattacharya said the slippages were across the board.
"In agriculture sector, we have seen a sharp spike in slippages (in Q1FY15) and that has not smoothened out. We are hopeful that in agriculture sector we will see some substantial pull back because of the instalment for debt waiver in Telengna have arleady been received and in other state it is also expected," she said.
Recovery stood at Rs 965 crore in the period compared to Rs 1,414 crore year-ago. The bank upgraded Rs 1,670 crore of loans while it wrote off Rs 4,787 crore.
It restructured Rs 4,351 crore of advances and has a pipeline of Rs 3,000 crore going forward.
Total sale of non performing assets to asset reconstruction companies in the quarter stood at Rs 406 crore.
Shares of SBI today rose by over 2 percent, adding Rs 5,174.17 crore to its market valuation, after earnings.
The bank's total provisioning rose 35 percent to Rs 5,322 crore in the quarter under review from Rs 3,937 crore during the September quarter last fiscal. Out of this, provision for loans jumped massively to Rs 4,028 crore from Rs 2,645 crore, while provisions on taxes increased 15 percent to Rs 1,047 crore from Rs 908 crore.
Talking about the outlook on non-performing assets, SBI Chairman Bhattacharya said she sees a gradual improvement in the asset quality. "I don't believe that we will see anything very sharp because this downturn has been very deep and therefore it will be only gradual improvement.
"But once we see the demand cycle coming back, definitely we can see things happening at a faster pace. The pace will pick up, but for the pace to pick up, we are still about 12 months away," she said.
Deposits increased 14.03 percent to Rs 14,73,785 crore and advances grew 9.07 percent to Rs 12,42,638 crore. "Loan growth is very muted. With the current level of interest rates the bank books will only grow with investments,and investments is something that is a few quarter away. So, we are not really seeing a very robust loan growth," Bhattacharya said.
She expects loan growth of 11-12 percent and deposit growth of 14 percent this fiscal.
On hiring plans, she said the bank every year will continue to hire as many as the number of people retiring.
On the issue of merger of associate banks, the chairman said the bank is in the process of preparing a roadmap.
"We are close to coming up with some kind of roadmap and the government is also eager to find out what are our views on this matter. So, we will come with it very shortly," she said.
Asked about whether the Reserve Bank has given any dispensation to banks in terms of loans to the companies whose coal blocks have been cancelled by the Supreme Court, she said that no relaxation has been given so far.
On the troubled Jaypee group, she said that bank does not fear that it will become a stressed asset. "I don't have any fears. They have made announcement regarding sale of cement and power assets. It will take time to get through and get the cash. Some portion will come in this financial year and some in next," Bhattacharya said.
On ATM usage charges which bank has recently revised, Bhattacharya said ATM transactions contribute to the banks overhead expenses and so it decided to charge customers.
"There is a cost to ATM transaction. If there are frequent transactions, as we do not have minimum balance charge, it goes to our bottomline," she said.
She said the bank is going to put out a request for proposal in December to appoint a single vendor for complete upkeep of its ATMs.
The bank has started a new initiative called dynamic rating which will rate corporates, to which it has given loan, if there is an event that impacts it.
"Earlier, we use to do an internal credit rating on loans once a year. Now, if there is an event that impacts a particular company or sector, then the rating will get checked immediately. We will accordingly adjust our pricing and appetite for doing whatever we need to do in that account," Bhattacharya said.
