Beating expectations, State Bank of India (SBI) has posted a 200-times rise in net profit to Rs 4,050 crore for the fourth quarter of the financial year ending March 2012, on lower provisioning and healthy growth in core income.
SBI, the country’s largest bank, had posted a net profit of Rs 20.9 crore during the same period of 2010-11. SBI stocks went up after the results’ announcement and ended 5.1 per cent higher than yesterday’s close, to Rs 1,942.
SBI had seen a 99 per cent drop in net profits during the fourth quarter of 2010-11 on account of higher provisioning towards bad loans. Income for the period under review increased 27 per cent to Rs 33,960 crore against Rs 26,537 crore during the same quarter in the previous financial year. “This is a blockbuster result for us. We have retained and consolidated our gains on the interest side. Our revenue growth has outstripped growth in expenses. Our net profit is on a rising trend,” said Chairman Pratip Chaudhuri. He said it is the highest quarterly profit for the lender. “We are now the third highest profit making company (in the country). Ahead of us are just Reliance Industries and ONGC.”
Healthy loan growth helped the lender post 44 per cent growth in net interest income and the net interest margin (NIM) also improved to 3.9 per cent from 3.07 per cent a year earlier.
“SBI had given a guidance (official expectation, for NIM) of 3.5 per cent for this year. However, it has been steadily improving each quarter, so we have been able to outperform our guidance. NIM for only domestic operations stood at 4.17 per cent,” he said.
Provisioning for bad loans fell 13 per cent to Rs 2,837 crore, while the bank set aside only Rs 27 crore for investment depreciation in the January-March period as compared with Rs 304 crore in the corresponding period of the previous year. Standard asset provisioning was down by 40.6 per cent to 647 crore.
‘War on NPAs’
The bank was able the arrest the decline in asset quality. It reported a fall in gross and net non-performing assets on a sequential basis. Gross non-performing assets (NPAs) rose 56.6 per cent to Rs 39,676 crore compared with Rs 25,326 crore during the fourth quarter of financial year 2012. However, against Rs 40,098 crore in the third quarter of 2011-12, gross NPAs are down 1.1 per cent. “The asset quality had suffered in the second and third quarters and we have declared a war on NPAs,” said the chairman.
Net NPAs on a quarter-on-quarter basis declined 16 per cent to Rs 15,818 crore in January-March, whereas it stood at Rs 12,347 crore during the third quarter. The board of directors has recommended a dividend of 350 per cent, or Rs 35 per share, for 2011-12.
“Strong core performance was mainly aided by robust NIM, despite moderate growth in the loan book. Stable asset quality is very comforting to us and makes us believe that things are likely to improve, going forward,” said Saday Sinha, an analyst with Kotak Securities.
For financial year 2012, SBI’s net profit zoomed 41.6 per cent to Rs 11,707 crore as compared with Rs 8,265 crore during 2010-11. During the year, total income increased 24 per cent to Rs 1,20,873 crore, against Rs 97,219 crore the previous year.
