Published: Fri, November 10, 2017
Finance | By Loren Pratt

Bank of India Q2 profit rises, beats estimates

Bank of India Q2 profit rises, beats estimates

SBI's total provisioning, including for non-performing assets (NPAs), or bad loans, for the quarter in consideration at Rs 18,418 crore were a whopping 87 per cent over the previous quarter's figure of Rs 9,869 crore and also 27 per cent higher over the provisioning in the same period past year.

Other income, including an exceptional one-time income arising from the sale of part stake in SBI Life Insurance, jumped 58 per cent to ₹16,016 crore.

On a postive note, the bank's asset quality improved on sequential basis post decline in fresh slippages in the second quarter.

State Bank of India Chairman Rajnish Kumar on Thursday said that there is limited space for further easing of the lending rate. "We will emerge stronger, just wait for two or three quarters".

"Deposit rate unless you cut you can not cut lending rate ... for time being we are in for much more stable interest rate", he said.

GNPAs as a proportion of gross advances improved to 9.83 per cent against 9.97 per cent in the preceding quarter.

"Sharp fall in fresh slippages has positively surprised us, as we were projecting slippages of about ₹15,500 crore" for the second quarter, Reliance Securities wrote in a note to clients.

In the preceding quarter the bank had made a provision of ₹12,125 crore. Slippages as a ratio of the total loan book fell to 1.85 per cent, from 5.37 per cent during the previous quarter.

Net interest income grew by 2.58% year-on-year to ₹18,586 crore as overall credit offtake remained muted.

Given the grim situation, the Indian government last month announced a $32 billion recapitalisation of state lenders to help resolve bad loans and kick-start lending growth.

Between April and September, the lender's staff strength declined by more than 10,000 - to 2,69,219, from 2,79,803 as 11,382 employees retired during the quarter and only 798 people joined the bank.

Likewise, net NPAs rose to 10.61 per cent of net advances from 8.93 per cent year ago comparable period. It was Rs194.21 crore for the same period a year ago, Novartis India said.

The net profit of India's largest bank in the reporting quarter (Q2FY18), however, is lower than in the first quarter (₹2,006 crore).

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