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Investors were also disappointed due to a Rs 8,175 crore rise in fresh slippages. The stock closed 1.8 per cent lower at Rs 2,214 on the Bombay Stock Exchange. Net slippages (excluding upgradation and recovery) were Rs 4,256 crore. The SBI management says sectors such as pharmaceuticals and steel-related units in Karnataka (where the Supreme Court had banned the mining of iron ore but later partially lifted it) contributed to the slippage.
“The business environment has been challenging,” Chairman Pratip Chaudhuri told reporters after announcing the results.
However, the bank expects about Rs 2,000 crore of loans that had slipped to be upgraded in the current quarter. “We will see more NPA (non-performing assets) turning standard. The fourth quarter will be more robust, as companies in the construction sector will have cash flows, as state governments are expected to release funds during the end of the year,” said Chaudhuri.
The restructuring pipeline is also likely to moderate in the fourth quarter. “We expect Rs 3,700 worth of loans to come for restructuring,” said Soundara Kumar, deputy managing director of the stressed asset management cell. She, however, added the figure excluded Suzlon Energy, in which Rs 800 crore of loans will be restructured.
The portfolio of stressed assets — NPA and restructured loans together — was Rs 77,703 crore, representing 7.8 per cent of gross advances. Both the gross and net NPA ratios worsened sequentially, rising respectively 5.3 per cent (to 53,457 crore) and 2.6 per cent from 5.15 per cent and 2.4 per cent. While the loan loss provision declined to 2,766 crore from Rs 3,006 crore in October-December 2011, provision coverage ratio declined to 61.5 per cent from 62.5 per cent.
Where it gained was from treasury operations. It booked a profit of Rs 469 crore from sale of investments in the October–December quarter, as compared to a loss of Rs 1,090 crore during the same period of the previous year.
With the bank choosing to cut loan spreads amid rising cost of deposits, the impact was felt on NII, which declined 3.2 per cent in the third quarter to Rs 11,154 crore from Rs 11,518 crore in the same quarter of 2011-12. Net interest margin (NIM) declined to 3.7 per cent from 4.1 per cent; for the second quarter, it was 3.77 per cent. Chaudhuri sees margins to be 3.7-3.75 per cent, going ahead.
Its average cost of deposits rose to 6.3 per cent in Q3 from 5.9 per cent on a year-on-year basis, while the yield on advances declined from 10.9 per cent in Dec 2011 to 10.75 per cent .
Its other income comprising fees, commissions, etc, rose 76 per cent to Rs 3,648 crore from Rs 2,073 crore.
SBI said its deposits rose 15.6 per cent to Rs 11,56,691 crore from Rs 10,00,965 crore a year before. Its share of low cost deposits – savings and current account – was 45.5 per cent, down from 47.5 per cent a year before. Chaudhuri said the bank expected deposits to grow 14 per cent in 2012-13.
