SBI profit drops 34% to Rs 2234 crore in Q3; NPAs rise

State Bank of India reported a 34 per cent year-on-year dip in quarterly net profit as bad loans rose amid the sharp slowdown in the Indian economy. This is the fourth consecutive drop in net income for SBI, which is the country's biggest lender.

State Bank of India reported a net profit of Rs 2,234 crore in the December quarter as against Rs 3,396 crore in the corresponding quarter last year. Net interest income, the difference between interests earned on advances and paid on deposits, rose to Rs 12,641 crore against Rs 11,155 crore year-on-year.

Brokers polled by NDTV had estimated SBI to report profit of Rs 2,540 crore and NII of Rs 12,800 crore.

Increase in bad loans hit SBI's bottom line, analysts said. Non-performing loans as a percentage of total assets rose to 5.7 per cent from 5.6 per cent in the preceding quarter.

SBI followed other state-run peers Punjab National Bank, Canara Bank and Bank of India in posting weak profits amid high defaults by corporates battling reduced cashflows, high inflation and delays in government approvals for projects.

Rajiv Mehta, AVP (research) at domestic brokerage IIFL told NDTV that SBI has set aside bigger funds as provisioning for bad loans, indicating continued asset quality pressures.

"Operational numbers are in line, though other income is higher than expectations. Fresh slippages have gone up and that is the source of the jump in the net NPAs," he added.

SBI shares fell as much 3 per cent to Rs 1,457 post earnings announcement.

Last month, India's top private sector lender ICICI Bank warned that corporate defaults would rise in the coming quarters as borrowers succumb to the pressure of a sluggish economy. ICICI posted its slowest profit growth in four years in the December quarter.

(With inputs from Reuters)