SBI stock zooms 10% as bad loans dip, outlook brightens
India's largest bank, State Bank of India, on Friday reported a 8% year-on-year drop in fourth quarter net profit due to higher provisions but shares surged 10% after the bank said there were signs of improvement in asset quality and profit beat analysts' expectations.business Updated: May 23, 2014 23:24 IST
India's largest bank, State Bank of India, on Friday reported a 8% year-on-year drop in fourth quarter net profit due to higher provisions but shares surged 10% after the bank said there were signs of improvement in asset quality and profit beat analysts' expectations.
SBI reported a net profit of Rs 3,041 crore during the January-March quarter - its fifth consecutive quarter of decline - from Rs 3,299 crore a year ago. It was, however, higher than analysts' expectation of a net profit of Rs 2,803 crore according to a Reuters poll.
The bank's net non-performing assets as a percentage of sales rose to 2.57% in January-March from 2.10% a year ago, but were lower than 3.24% NPAs it reported in the October-December quarter.
Its fresh slippages were also lower sequentially at Rs 7,947 crore compared with Rs 11,438 crore in the third quarter.
Net interest income (the difference between interest earned on loans and interest paid on deposits) rose 16.5% year-on-year to Rs 12,903 crore, while net interest margin was stable at 3.49%.
"SBI reported healthy performance on the asset quality front while operating performance came ahead of our estimates," said Vaibhav Agrawal, vice-president, research, Angel Broking.
On investors' expectations that the new government will speed up reforms and give faster clearance to big projects, SBI chairperson Arundhati Bhattacharya said: "We are all optimistic about the new government. We should grow as per the economy. (But) the credit growth will come with a lag."