SBI Q2 profit falls 37% despite stake sale in life insurance venture

SBI was catapulted into the league of the top 50 global banks this year after it merged five subsidiary banks with itself

Kumar said nearly the entire second list of the stressed accounts will go to NCLT.

Gross NPAs' ratio fell to 9.83 per cent from 9.97 per cent in the last quarter, while the net bad loan ratio decreased relative to the previous quarter to 5.43 per cent from 5.97 per cent. But standalone profit of the top state run lender missed the market's estimate as it dropped significantly 37 per cent year-on-year to Rs 1,581.55 crore from Rs 2,538.32 crore.

Gross bad loans as a percentage of total loans stood at 9.83 percent at end-September compared with 9.97 percent at end-June. The bank ascribed the drastic profit fall to higher provisioning for bad loans particularly of those defaulters who are being tried in the National Company Law Tribunal under the Insolvency and Bankruptcy Code.

On asset quality, the chairman said "we are capable of handling NPAs and well emerge stronger".

The bank parked a part of the IPO proceeds from SBI Life for accelerated provisioning taking its provision coverage ratio to 65.10 per cent. "The effort will be to strengthen it further", he added. Retail franchise is giving us tremendous support.

EBITDA for the quarter fell by 19.2% to Rs 181 cr as compared to corresponding quarter in the previous year with a corresponding margin contraction of 286 bps.

Net profit for the September quarter was Rs 1582 crores down from Rs 2538 crore a year ago.

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"Yes, this quarter we had some cushion available from the stake sale of SBI Life", he said.

"The rate at which the slippage ratio has started to come down, hopefully we are in for good times", he said.

Between April and September, the lender's staff strength declined by more than 10,000 - to 2,69,219, from 2,79,803 as 11,382 employees retired during the quarter and only 798 people joined the bank.

In line with its provisioning requirement against potential losses as directed by the RBI, State Bank has made 75 per cent of the requirement upfront in case all accounts are admitted to the NCLT. Net NPAs increased to Rs 97,896.29 crore as against Rs 60,013.45 crore.

Slippages from SBI's watchlist of potential bad loans amounted to Rs 10,424 crore, while the total watchlist stood at Rs 21,288 crore.

"The results were comforting to see and is probably the best set of numbers from SBI that we've seen in the recent past especially when there is still uncertainty over non performing loans issue", said Aalok Shah, a banking sector analyst at Mumbai's Centrum Broking.

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