Q1 Results: SBI Swings To Profit But Misses Forecast
State Bank of India reported a profit in the quarter ended June on lower provisions, but it missed analysts' estimates.
Net profit stood at Rs 2,312 crore in the June quarter compared with a loss of Rs 4,785.8 crore in the year ago period, SBI said in an exchange filing. That's lower than the Rs 4,105-crore consensus estimate of analysts tracked by Bloomberg.
Net interest income, or core income, rose 5 percent year-on-year to Rs 22,939 crore—in line with the Rs 23,274-crore estimate.
SBI's gross non-performing asset ratio in the first quarter remained unchanged at 7.53 percent over the preceding quarter. Its net bad loan ratio stood at 3.07 percent against 3.01 percent as of March. SBI's provisions for bad loans fell to Rs 9,183 crore from Rs 16,501 crore in the quarter ended March. Its provision coverage ratio—an indicator of balance sheet strength—stood at 79.3 percent. A provision coverage ratio of about 70 percent is considered healthy.
The core operating numbers were in line with the street's expectations, said Ravikant Anand Bhat, research analyst (banking) at IndiaNivesh. “However, the biggest surprise is the gross slippages, which is almost two times of what we were estimating,” he told BloombergQuint.
Agreed Aalok Shah, research analyst at Monarch Networth Capital. The slippages, he said, were a “disappointment”. While the slippages looked a bit elevated, he said, a sequential decline in gross bad loan numbers reflects the recovery upgradation and some write-offs.
What Led To Higher Slippages
“One regular account of a Maharatna company, which slipped into NPA books of another bank further impacted the gross slippages,” Rajnish Kumar, chairman at the state-run lender, said in a media statement. “One bank did not successfully implement the resolution plan fully on time. This account added about Rs 2,000 crore to the slippages, but the situation can be corrected.”
Also, the agriculture loan portfolio where debt waiver issues emanating from just one state contributed around Rs 2,000 crore to the slippages, he said.
Managing Director PK Gupta, however, said the lender neither had higher exposure nor did it witness an increase in bad loans in its Rs 11,500-crore auto dealer financing portfolio since March.
Every quarter I am looking at the sky and praying to God that the three large NCLT accounts stuck in the middle of resolution get resolved. But these alone will give us more than Rs 16,000-crore write-back.Rajnish Kumar, Chairman, SBI
Earlier this month, Chairman Kumar had said he expects higher recoveries from bad loan accounts to improve SBI's performance in the second half of this fiscal.
Key Highlights
(Quarter-On-Quarter)
- Gross slippages stood at Rs 16,212 crore versus Rs 7,505 crore.
- Domestic net interest margin at 3.01 percent against 2.95 percent.
- Loans grew at 13.8 percent year-on-year and deposits at 7.17 percent.
Shares of SBI fluctuated between gains and losses to trade flat at Rs 317 apiece after the results announcement. That compares with a 0.4 percent gain in the benchmark Nifty 50 Index. The stock has gained around 6.7 percent so far this year.
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
