SBI back in profit as NPA worries ebb

State Bank of India (SBI) bounced back to profitability after three straight quarters of losses due to a one-time gain, lower non-performing assets (NPAs) and higher interest income. Retail loans, led by home loans and personal, continued to keep the bank's credit growth strong.

Having "caught hold of the NPA demon", SBI chairman Rajnish Kumar said that the subsequent quarters would be stronger with big NCLT (National Company Law Tribunal) cases such as Essar Steel getting resolved. "We will see a Rs 6,000 crore write-back from one of the NCLT-1 accounts," he said. Credit growth is also on an upswing and lending rates are expected to rise.

"Though net profit in the fiscal second quarter has been modest, I assure you that there is no looking back. From here on, this number will only be bigger and better," said a confident Kumar.

SBI reported a net profit of Rs 944.87 crore for the three-month period ended September 30, 2018, compared to a loss of Rs 4,875.85 crore in the preceding quarter. Net profit in the year-ago period was, however, 40.26% higher at Rs 1,581.55 crore. Net interest income increased by 12.48% to Rs. 20,906 crore during the quarter. The interest expenses on its deposits were contained at 2.81% over the previous year to Rs 34934 crore despite 7% growth in deposits.

The state-owned bank would have slipped into another quarter of loss but for a one-time gain of Rs 1,087.4 crore from the sale of investments in its general insurance and merchant banking businesses.

Kumar said the bank managed to report profits despite a Rs 1,700 crore mark-to-market provisioning and Rs 900 crore for provisions for gratuity during the quarter.

The stock closed 3.45% higher at Rs 295 on the BSE. It was the top Sensex and Nifty gainer in trade today.

SBI's gross NPAs fell to Rs 2.13 lakh crore in the reporting quarter compared to 2.23 lakh crore in the preceding one. Recovery in written-off accounts grew 14.6% to Rs 1,327 crore in the second quarter, the bank said in a statement.

Fresh slippages during the quarter stood at Rs 10,725 crore. Reflecting an improvement in asset quality, SBI's gross NPAs stood at 9.95% versus 10.69% in the trailing quarter. Net NPAs stood at 4.84% compared to 5.29% in the quarter ended June 20, 2018.

Domestic advances grew 11.11% to Rs 17.78 lakh crore. Retail advances, including SME, agriculture and personal loans, grew 8.91% to Rs 10.33 lakh crore. Out of this, retail personal loans grew 14.23% to Rs 5.76 lakh crore and home loans by 14.26% to Rs 3.59 lakh crore. SME advances grew 5.24% to Rs 2.65 lakh crore and corporate advances by 14.03% to Rs 7.45 lakh crore at the end of September 2018.