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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Pricing Controls

REUTERS SHOWCASE

India-China Relations

India-China Relations

India says to defend China border after standoff ahead of Xi visit.  Full Article 

Importing Iron Ore

Importing Iron Ore

As mining curbs bite, India offers market to glut-hit iron ore.  Full Article 

Lower Output

Lower Output

IOC cuts refinery output as rains hit fuel demand - source.  Full Article 

Drug Approval

Drug Approval

Epirus, Ranbaxy win India approval for arthritis drug copy.  Full Article 

Farming and Technology

Farming and Technology

Climate smart farmers get tech savvy to save India's bread basket.  Full Article 

Rajan Speaks

Rajan Speaks

RBI chief Rajan says limiting reliance on foreign debt.  Full Article 

India-Vietnam Ties

India-Vietnam Ties

India tightens Vietnam defence, oil ties ahead of China Xi's visit.  Full Article 

Debt & Equity Deal

Debt & Equity Deal

KKR to lend $175 million to GMR Infrastructure - source.  Full Article 

Preparing for IPO

Preparing for IPO

Alibaba boosts IPO as demand strengthens.  Full Article 

Reuters India Mobile

Reuters India Mobile

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