SBI logs 30 pc rise in Q3 Net; keeps NPAs, costs under control

Country's largest lender State Bank of India today reported a 30 per cent rise in net profit at Rs 2,910 crore for the third quarter ended December 2014 helped by higher treasury income and tight cost control steps.

The bank had reported a net profit of Rs 2,234.34 crore in the same period a year-ago.
The total income of the bank rose to Rs 43,784 crore in the October-December 2014 quarter as against Rs 39,068 crore during the corresponding quarter of the previous fiscal.

"Overall, other incomes increased 24 per cent, on the back of a strong NII (Net Interest Income) performance and lower expenses which have driven profit," SBI Chairman Arundhati Bhattacharya told reporters here today.

Other income grew to Rs 5,283 crore from Rs 4,215 crore in the year ago period, she said, adding that treasury income zoomed to Rs 920 crore from Rs 238 crore last year, while fee income rose 10.75 per cent to Rs 3,291 crore from Rs 2,971 crore.

Strict cost control measures saw the bank spending only 5.51 per cent more on operating expenses at Rs 9,720 crore against Rs 9,213 crore.

NII rose 9.20 per cent to Rs 13,777 crore from Rs 12,616 crore in the year-ago period.
The lender's asset quality also improved during the quarter. Gross Non-Performing Assets improved to 4.90 per cent from 5.73 per cent, while net NPAs stood at 2.80 per cent as against 3.24 per cent.

"With all the recovery efforts we are doing, we hope to keep NPA level under control going forward. But we have to wait for a quarter or two to say that we have come out of the problem," Bhattacharya said.

Fresh slippages of the bank stood at Rs 7,043 crore.Bhattacharya said slippages came from sectors such as iron and steel, textile trade, services and power.

On a specific question over Bhushan Steels, she said the consortium led by the bank is making all recovery efforts and the account is unlikely to become a bad loan.

Markets lapped up the spike in overall metrics. The SBI stock jumped by 8 per cent to Rs 307.05 on the BSE, whose main index Sensex rose 1.01 per cent.

The bank sold Rs 475 crore worth of loans to asset reconstruction companies in the period. "We are going to have mega auction in March, wherein 300 assets amounting to around Rs 1,200 crore will be put on block. Out of these 300 assets, 100 will be residential," Bhattacharya said.

Total recovery and upgrades stood at Rs 667 crore while the bank wrote off Rs 5,096 crore.

In the quarter, bank restructured Rs 4,092 crore of standard loans, and Rs 1,454 crore worth of restructured loans became NPAs.

The bank has a restructuring pipeline of Rs 5,500 crore in the fourth quarter.Under the new 5:25 scheme, SBI has received request for eight large projects and it is processing those requests. The net interest margin of the bank stood at 3.12 per cent as against 3.19 per cent.

Deposits of the bank increased to Rs 15,10,077 crore, up 11.86 per cent, from Rs 13,49,940 crore. Gross advances increased 6.91 per cent to Rs 12,65,483 crore from Rs 11,83,723 crore.

Bhattacharya said she expects the credit growth at 10 per cent in this fiscal.On fund raising plans through medium term notes, SBI Managing Director and Group Executive Pradeep Kumar said the decision is yet to be taken.

"We are looking at what is the likely demand. There are some maturing liabilities. We have not taken a final call," Kumar said.

The bank has initiated its process to raise Rs 15,000 crore through a public offer which will include rights issue to fund business and meet global capital adequacy norms. Earlier this week the bank appointed eight merchant bankers for the share sale.

SBI Deputy Managing Director and CFO PK Gupta said the share sale may happen in this quarter or next quarter, as there are some approvals which are yet to come.

Previous week, the government had announced to infuse Rs 2,970 crore into SBI under its Rs 11,200 crore capital infusion plan for public sector banks, announced in the Budget for 2014-15.