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Double trouble for SBI NPAs, staff cost hurt net

Mumbai, Feb. 14: The State Bank of India (SBI) today reported disappointing numbers for the third quarter ended December 31, 2013, with net profits dropping 34.21 per cent on higher provisions for bad loans and a jump in staff expenses.

The country’s largest bank earned a net profit of Rs 2,234 crore compared with Rs 3,396 crore in the corresponding previous period. This is the fourth straight quarter when the SBI is reporting a fall in its net profit.

The poor show came on the back of a rise in non performing assets (NPAs), which necessitated higher provisions.

While gross NPAs in absolute terms jumped to Rs 67,799 crore from Rs 64,206 crore in the preceding quarter, fresh slippages rose to Rs 11,438 crore from Rs 8,365 crore in the beginning of the quarter.

Another worrying factor is the spike in loan write-offs to Rs 5,077 crore from Rs 1,253 crore in the second quarter.

Speaking to reporters here today, chairperson Arundhati Bhattacharya indicated that banks would continue to face stress in some of their accounts, particularly in mid-corporate and SME sectors. She added that unless the domestic economy started picking up, banks were likely to feel the pressure on their asset quality.

While loan loss provisions increased nearly 25 per cent over the same period last year to Rs 3,429 crore, higher staff expenses also contributed to lower profits.

The bank said it had to make a provision of Rs 600 crore for pension.

This apart, it made a provision of Rs 453 crore towards wage revision and set aside higher amounts towards superannuation benefits. All this resulted in pushing up the total operating expenses by over 31 per cent.

Net interest income — interest earned minus interest expended — increased to Rs 12,641 crore from Rs 11,176 crore a year ago, a growth of 13 per cent against the nearly 12 per cent growth in the second quarter.

Even as non-interest income registered a rise of around 26 per cent, the domestic net interest margin, a key measure of profitability, rose marginally to 3.51 per cent from 3.49 per cent in the preceding quarter.

Gross advances increased to Rs 11,83,723 crore in December 2013 from Rs 10,78,557 crore in March 2013, a growth of nearly 10 per cent.

Retail advances rose to Rs 2,30,827 crore from Rs 2,09,694 crore during the same period, while home loans showed a jump of over 13 per cent during the same period.

The bank’s total capital adequacy stood at 11.59 per cent according to the Basel-III framework.

Shares of the SBI closed lower at Rs 1,475.10 against Rs 1,499.65 on the Bombay Stock Exchange on Thursday. The stock had touched a high of Rs 1,513.70 during the day.

 
 
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