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:

Fast-tracking Projects

REUTERS SHOWCASE

Oil Prices

Oil Prices

Oil resumes slide after brief rebound on short-covering.  Full Article 

Space Programme

Space Programme

ISRO tests its heaviest space launch vehicle, eyes global market   Full Article 

Coal India Strike

Coal India Strike

Coal India workers threaten five-day strike, stokes output worries  Full Article 

Gold Discount

Gold Discount

Dealers offer gold discount for first time in five months  Full Article 

Lakhvi Granted Bail

Lakhvi Granted Bail

Pakistan court bails man accused of masterminding Mumbai attack  Full Article 

GST Bill

GST Bill

Cabinet clears bill for nationwide goods and services tax.  Full Article 

Aviation Sector

Aviation Sector

Breakingviews: SpiceJet rescue is no fix for India aviation woes.  Full Article 

Global Economy

Global Economy

Fed confident on U.S. growth, opens door wider to rate hike.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

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