State Bank of India today reported its worst quarterly profit in over two years with a sharp 35 per cent drop in earnings at Rs 2,375 crore in the three months to September, hit hard by higher provisions for staff expenses, bad loans and investment depreciation.
Standalone total income was Rs 37,199.92 crore as against Rs 32,953.47 crore in the same period a year ago.
"Provisions for loan losses, provision for the staff wage hikes, provision for pensions and of course the investment depreciation were the reasons for dip in the net profit in the quarter," the newly-appointed SBI chairman and managing director Arundhati Bhattacharya said.
This is the worst quarterly performance of the nation's biggest lender since the massive 90 per cent plunge which brought the bank's net profit to just Rs 20.88 crore for the March 2011 quarter. Pratip Chaudhuri had taken over as chairman in April, 2011.
"Also, the fact that we have really not been able to book that kind of income on sale of investments as we had been able to do in the first quarter, due to the fact that interest rates have actually hardened. All of this accounted for lower bottomline," Bhattacharya said.
This is Bhattacharya's maiden earnings report after she took over charge on October 7 as the first woman head of SBI which controls nearly a quarter of country's banking assets.
SBI's total provision rose 6.53 per cent to Rs 3,937 crore as against Rs 3,696 crore in the same period last year.
Despite the poor set of numbers, the market lapped up the SBI counter, which is down around 50 per cent from its lifetime high. Today, the SBI counter closed 1.34 per cent higher at Rs 1697.85 on the BSE, whose benchmark Sensex shed 0.45 per cent.
Saday Sinha, banking analyst at Kotak Securities said the bank's net interest margin (NIM) at 3.2 per cent was ahead of his expectations on the back of a 19 per cent loan growth.
However, the profit after tax (PAT) came a shade below expectations due to higher-than-expected operational expenditure and Non-Performing Assets (NPA) provisions, he added.
