Hit by higher provisions for bad loans and fall in interest income, banking behemoth SBI today reported 18.5 per cent decline in profit to Rs 3,299 crore for January-March period, its first quarterly fall in two years.
Reacting to the below expected numbers, shares tanked 8.87 per cent on BSE, wiping off Rs 12,867 crore from its market value.
"The fall in growth of net profit had been due to higher provisioning for sub-standard and doubtful assets for which provision-coverage ratio (PCR) had been increased in the last quarter of FY'13," SBI Chairman Pratip Chaudhuri told reporters after declaring the annual results here today.
Loan provisioning in Q4 was Rs 3,974 crore, he said.
The SBI chief said NPAs in the agriculture sector posed a challenge as also mid-corporate and SME sectors.
About the future outlook, he said that there would be a marginal increase in corporate loans and capital expenditure.
"There will not be much improvement in these areas. Coupled with this, there will also be a contraction in demand due to high interest rate regime followed by the monetary authority," he said.
Net interest margin (NIM) of the bank as on March 2013 stood at 3.34 per cent (3.85 per cent). NIM guidance for the bank for the current fiscal was 3.60 per cent, he said.
The gross NPA as a percentage of total loans rose to 4.75 per cent during the quarter, from 4.44 per cent in the year ago period.
Commenting on SBI numbers, Motilal Oswal Securities VP (Equities) Gautam Sinha Roy said net profit declined 19 per cent which was "below estimates". "Provisions came in at Rs 4,180 crore which were above estimate of Rs 2,750 crore," he added.
