Lower bad loans help SBI return to profit after 3 qtrs of heavy losses

Mumbai: After three quarters of continuous losses, a massive one-time gain and better asset quality helped the SBI Monday report a consolidated net profit of Rs 576 crore for the September quarter, down 69 per cent y-o-y.

The country's largest lender had posted a Rs 4,875.85 crore net loss in the previous quarter.

At the standalone level, net income fell 40 per cent to Rs 944.9 crore from Rs 1,581.55 crore on the back of better asset quality. A higher tax outgo of Rs 868 crore also led to a lower bottomline. The numbers would have been bad, had it not been for the one-time income of Rs 5,436 crore on part stake sale in SBI Life during the quarter.

For the lender, this comes as a big breather having been in the red for the past three quarters. In the June quarter, the bank made a loss of Rs 4,876 crore and also in the March 2018 quarter when it had reported its biggest-ever net loss of Rs 7,718 crore.

Investors lapped up the numbers as they were expecting heavy losses this time around as well. The SBI counter, which remained in the green throughout the day, closed with a gain of 3.45 per cent on the BSE at Rs 295.30, after scaling Rs 299.90 post-results, while on the NSE it was the best performer hitting Rs 300. Against this, the indices closed in the red with marginal loses in a choppy trade.

The management guided towards better days ahead as it expects credit cost or provisioning to continue to improve as the quality of its assets gets better. The bank is also hopeful of clocking better credit sales and further improving the margin.

State Bank of India (SBI) Chairman Rajnish Kumar told reporters in a concall that the bank does not have an issue with its exposure to the troubled IL&FS group, which is only a little over Rs 4,250 crore -- to the group's a dozen or so special purpose vehicles, of which only one account is an NPA and has accordingly made a provision of Rs 56 crore. Of the total Rs 4,000 crore are to 12-14 SPVs and Rs 250 crore is the holding company.

Total consolidated income rose to Rs 79,302.72 crore in the quarter under review from Rs 74,948.51 crore a year ago, and standalone income rose to Rs 66,607.98 crore from Rs 65,429.63 crore. Gross non-performing assets (NPAs) increased to 9.95 per cent from 9.83 per cent a year ago, while net NPAs improved to 4.53 per cent from 4.84 per cent. But, this is better than the June quarter performance when GNPA stood at 10.69 per cent.

The lender, which controls a little over 22 per cent of the system, reported net NPAs of Rs 94,810 crore down from Rs 99,263.3 reported in June quarter. In absolute, gross NPAs came in at Rs 2.05 trillion down from Rs 2.12 trillion in the previous quarter.