Asset quality improved sequentially as well as year-on-year.
Mumbai: The country's largest lender State Bank of India (SBI) on Friday posted a three-fold rise in Q2 FY20 standalone net profit to Rs 3,012 crore aided by partial stake sale in its life insurance subsidiary, higher net interest income and improved asset quality. The net profit during the corresponding period of last year was Rs 945 crore. The bank posted a net interest income (NII) of Rs 24,600 crore during July-September 2019 from Rs 20,906 crore in Q2FY19, an increase of 17.67 per cent year on year.
"Exceptional items represent net profit of Rs 3,190.97 crore on sale of partial investments in SBI Life Insurance Company Ltd. Consequently, the holding of SBI in the subsidiary reduced to 75.9 per cent from 62.1 per cent," SBI said.
"The entire proceeds from the stake sale of SBI Life was used to make an upfront provision on a loan to a power company and a stressed NBFC account," said Rajnish Kumar, Chairman, SBI.
Kumar told reporters that the bank's plan to come out with the IPO of SBI General Insurance is off the table and would be done only when its valuation rises as the "non-life insurer is still young”. “However we would be coming out with IPO of SBI Cards subsidiary by year end,” said Kumar.
The non-interest income increased to Rs 12,023 crore in Q2FY20 from Rs 9,375 crore in Q2FY19, an increase of 28.24 per cent year-on-year (YoY).
The domestic net interest margin (NIM) improved 21 basis points quarter-on-quarter (QoQ) to 3.22 per cent, registering an increase of 42 basis points YoY and 21 basis points sequentially. Fresh slippages halved to Rs 8805 crore during Q2FY20 from Rs 16,212 crore during Q1FY20. “The gross slippages will not exceed even 2 per cent during the year even in the worst case scenario,” added Kumar.
Asset quality improved sequentially as well as year-on-year. The gross non-performing assets (NPA), as a percentage of gross advances was Rs 1.61 lakh crore, it fell 34 bps QoQ to 7.19 per cent. Net NPAs as a percentage of net advances were Rs 59,939 crore, dropped 28 bps QoQ to 2.79 per cent.
Provisions and contingencies for the quarter-ended September stood at Rs 13,139 crore, up 8.7 per cent YoY and 43 percent sequentially. Provision coverage ratio (PCR) improved significantly by 1049 bps YoY from 70.74 per cent as on September 2018 to 81.23 per cent as on September 2019. Sequentially also, PCR has improved by 189 bps.
The SBI stock climbed 8 per cent to close at Rs 282 amid hefty volumes of 10.5 crore shares traded on the NSE.