 "SBI's asset quality disappoints, Q1 net profit falls 14% on rise in bad loans")
State Bank of India (SBI), the country’s largest lender, posted a second consecutive drop in quarterly net profit, missing estimates, on worsening asset quality, higher operating expenses and muted growth in interest income.
The state-run bank posted on Monday a 13.6 percent drop in net profit to Rs 3,241 crore in the fiscal first quarter that ended in June compared with Rs 3752 crore a year ago. Analysts had expected a net profit of Rs 3620 crore.
[caption id=“attachment_1026427” align=“alignleft” width=“380”]  Reuters[/caption]
Net interest income rose 3.5 percent to Rs 11512 crore.
The bank’s shares fell more than 5 percent after the earnings were announced.
The bank’s gross non-performing asset (NPA) increased 19 percent sequentially to Rs 60,891 crore and net non performing assets jumped 36.6 percent quarter-on-quarter to Rs 29,989 crore during April-June quarter.
“SBI has disappointed on the asset quality front. Slippages were expected to be on the higher side and so we were expecting close to 5 per cent kind of gross NPL but they are significantly higher than that. On the NII side, they have done better,” said Nitin Kumar, Research Analyst, Quant Broking.
SBI expanded its standalone loan book by about 16 percent (Y-o-Y) to nearly Rs 11 lakh crore. However, sequential growth in credit was just at 1.44 percent. Deposit grew 14 percent Y-o-Y to Rs 12.57 lakh crore.
Impact Shorts
More ShortsTerming SBI’s earnings as weak results led by slow growth in core earnings and rise in provisioning for bad loans, brokerage Anand Rathi recommended a sell on the stock.
With inputs from Reuters
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