Bad loan eat into SBI profits, Q1 net falls 20.4% to Rs 2,005.5 cr

India's biggest lender by asset, State Bank of India (SBI), on Friday reported 20.45 percent decline in its net profit for the quarter ended June 30 as bad loans spiked, reported Mint. The bank's net profit stood at Rs 2,005 crore in the first quarter of 2018 fiscal as against Rs 2,520 crore for the corresponding quarter a year ago.

Provisions, funds set aside by bank for anticipated future losses, surged 53.1 percent to Rs 21,054.74 crore in June ended quarter from Rs 13,752.66 crore in the same quarter last year.

The lender in its defence said its results are not comparable with the previous year as it merged its six associate banks with itself during the quarter.

Consolidated net interest income during the quarter declined 1.8 percent to Rs 19,323 crore compared with the corresponding quarter of last year, impacted by lower net interest margin and slow loan growth.

As a percentage of total loans, gross non-performing assets (NPAs) spiked to 9.97 percent during the quarter as compared to 6.9 percent in the previous quarter and 6.94 percent in the year-ago quarter. Net NPAs rose to 5.97 percent in the June quarter compared to 3.71 percent in the previous quarter and 4.05 percent in the same quarter last year.

The bank's asset quality worsened, with gross NPAs surged by 85.21 percent to Rs 1.8 lakh crore (Rs 1.88 trillion) at the end of the June quarter from Rs 1 lakh crore (Rs 1.01 trillion) in the same quarter last year.

Bank's consolidated gross slippages for the quarter stood at Rs 30,059 crore and watchlist at Rs 24,444 crore (Rs 32,427 crore quarter on quarter), Chairperson Arundhati Bhattacharya said while addressing a press conference. Slippages from the watchlist were at Rs 7,976 crore in Q1, she added.

Net interest income (NII) or the core income a bank earns by giving loans increased 22 percent to Rs 17,606.01 crore from Rs 14,437.31 crore last year. On the other hand, the bank's advances for the quarter rose 27.37 percent to Rs 18.04 trillion from a year ago.

At 3:00 pm, SBI shares were trading at Rs 279.70 on the BSE, down 5.6 percent from its previous close, while India's benchmark Sensex index fell 344 points to 31,185.54.