NPA, pension provision, gilt losses pull SBI profit down 34 pc

Country's largest bank SBI today reported a steep 34 per cent fall in net profit to Rs 2,234 crore for the October-December period of 2013-14 due to rising asset quality stress, investment losses and hefty provisioning for pensions, and warned of "more pain" coming in.
Painting a grim picture of an elongated period of stress, State Bank of India (SBI) Chairperson Arundhati Bhattacharya said bulk of the stress on assets came from mid-corporate and SME segment.
"We need at least a couple of quarters of uptick in GDP for the asset quality to be better. I see more pain coming in," she said

The bank has decided to move the stress assets recovery branches that were reporting in the National Banking Group so as to have better focus and outcomes, she said.
"With that in mind we have now changed the structure and created four general managers- north, south, east, west, who will be reporting into the stress management group and will actually be owning these stress asset recovery branches in the circles," Bhattacharya said.
The bank's gross non-performing assets (NPA) ratio deteriorated to 5.73 per cent as against 5.30 per cent in the year-ago period, while provisions towards loan losses rose to Rs 3,428.59 crore from Rs 2,766 crore a year ago.

The core profitability gauge, net interest income, grew 13.10 per cent to Rs 12,640 crore, while non-interest income rose to 4,190 crore from Rs 3,626.74 crore.

Analysts at Kotak Securities said the core earnings growth came below expectations due to reduction in the net interest margin (NIM), which dipped to 3.49 per cent from 3.72 per cent a year ago on a dip in yield on advances.
The SBI scrip ended 1.64 per cent down at Rs 1,475.10 apiece on the BSE, whose 30-share benchmark gained 0.86 per cent at the end of the session today.
The bank had Rs 11,000 crore in fresh slippages, including Rs 9,500 crore from SMEs and mid-corporates alone and added Rs 6,165 crore into the restructured book during the quarter, while a cleaning up of balance sheet resulted in a write-off of around Rs 5,000 crore, Bhattacharya said.