State Bank of India, the country’s largest lender, beat expectations with a 3.3% annual growth in profit at Rs 3,349 crore for the quarter ended June 2014 against forecasts of Rs 2,824 crore. The bank had posted a profit of Rs 3,241.08 crore for the same quarter last financial year, and Rs 3,040.74 crore in the sequential quarter. Markets, however, did not receive the results too well, likely on account of an overall weak sentiment. SBI is trading nearly 1% lower after announcement of results.
The bank’s numbers, however, throw up some interesting details. Here are five key takeaways from SBI’s results.
1. Total income of the bank (standalone) increased from Rs 36,192.62 crore in June 2013 to Rs 40,739.21 crore in June 2014 but net interest income (NII) grew from Rs 11,512 crore to Rs 13,253 crore, an increase of 15%. Advances were up 13% while deposits increased by 12.85%.
2. Importantly, SBI has improved its domestic net interest margin (NIM) – a key indicator of a back’s performance – from 3.49% to 3.54%. However, it faced pressure on the global front with NIM dropping from 3.17% to 3.13%.
3. SBI’s asset quality remained stable, with gross non-performing assets (NPAs) showing a sharp decline of 66 basis points on an annual basis but fell only marginally – 5 basis points – sequentially. One basis point is one-hundredth of a percentage point. Gross NPAs stood at 4.9% while net NPAs were at 2.66%. At the net level, NPAs has increased sequentially from a level of 2.57% but are lower than 2.83% in the same quarter last financial year.
4. Though fresh restructuring has increased by Rs 3,598 crore during the quarter, it is down from Rs 7,636 crore witnessed in the March quarter. Recoveries stood at Rs 3,185 crore and asset upgradation at Rs 1362 crore during the quarter. These numbers stood at Rs 8843 crore in the March quarter. The bank is still under pressure in terms of its asset quality which can be seem from fresh slippages rising by Rs 9932 crore. Further, the bank has written off loans worth Rs 6,556 crore in the June quarter. Provisions for non-performing assets, though, have slipped sharply from Rs 5,883 crore in the March 2014 quarter to Rs 3,903.41 crore in the June quarter, However, NPA provisioning is higher than the Rs 2,265.83 crore in the June quarter last fiscal. SBI’s provision coverage ratio stood at 62.68 per cent.
5. SBI has also been able to drive growth from the retail segment. Segmental profit of retail division stood at Rs 4534.01 crore, around 73 per cent of the total segmental profit. However, in terms of revenue SBI witnessed slower growth from the previous quarter.
