SBI net profit up 4 percent as bad loans weigh

MUMBAI Thu Feb 14, 2013 2:30pm IST

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009. REUTERS/Arko Datta/Files

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - State Bank of India, the country's biggest lender, posted a 4 percent rise in quarterly net profit, its smallest increase in six quarters, as higher provisions for bad loans and slower loan demand in a sluggish economy hurt growth.

Problem lending has risen in India as the country's worst economic slowdown in a decade clouds the outlook for banks including SBI, which accounts for a quarter of all loans and deposits in the country.

Net profit rose to 33.96 billion rupees for the quarter ended December, from 32.6 billion rupees a year earlier, the bank said on Thursday.

Analysts, on average, had expected a net profit of 36.96 billion rupees, according to Thomson Reuters I/B/E/S.

Net interest margin, a key gauge of profitability, stood at 3.7 percent at end-December, in line with estimates. Provisions rose to 26.7 billion rupees in the quarter, from 24.1 billion a year earlier.

The government-controlled bank, which has exposure to many of India's most beleaguered big borrowers including state electricity boards, Suzlon Energy, Kingfisher Airlines and Air India, said net non-performing assets rose to 2.59 percent of assets in the December quarter from 2.22 percent a year earlier.

SBI's gross bad loans, before recoveries and write-offs, stood at 5.3 percent of assets in the quarter, an increase of nearly a third from a year earlier at a time when analysts were expecting asset quality to improve.

The lender has been aggressive in identifying bad loans and making provisions since Chairman Pratip Chaudhuri took the reins in 2011. Its bad loan levels are above the industry average of around 3 percent.

SBI shares recovered ground after slipping as much as 3.5 percent after the results. At 2:07 p.m., the stock was down 1.7 percent. The stock is down 6 percent this year, underperforming the NSE's banking sub-index that is down 1 percent in the same period.

(Reporting by Swati Pandey, Writing by Prashant Mehra; Editing by Jeremy Laurence)

FILED UNDER:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage