SBI Q4 net up 200 times at 4,050 cr Chairman Credits ‘Blockbuster’ Result On Drop In Bad Loan Provisions

Kolkata:Beating market estimates, the country's largest lender, State Bank of India (SBI), has reported a net profit of Rs 4,050 crore for the quarter ended March 2012, nearly 200 times the net profit of Rs 21 crore in the corresponding period last year. 

    Profits surged because of the banks ability to raise lowcost deposits even as returns on loans surged because of firming interest rates. The bank's net interest income rose 33% to Rs 43,291 crore. SBI was expected to report a manifold rise because the bank had made extraordinary provisions for bad loans and employee wages in Q4 results of FY11. But the fourth quarter profits still managed to surprise the markets. 

    The results described as "blockbuster" by the bank's chairman Pratip Chaudhuri, changed market mood, reversing the downtrend with the sensex that closed 82 points up at 16,153 after plunging below 16,000 intra-day. The SBI scrip also had a positive rub-off, closing at Rs 1,942 apiece, up more than 5%. Led by SBI, the BSEBankex became the top-performing sectoral index with a rise of 1.75 %. Besides the earnings, which were driven by an improvement in net interest margin from 3.32% to 3.75%. 

    "We had declared a war against non-performing assets (NPA) and we seem to be winning as we have managed to bring down our NPAs substantially in this quarter compared to the previous quarter," the chairman said here on Friday. The bank's net NPA came down to 1.82% in the March quarter, compared to 2.22% in the December quarter. "We managed to curb on our NPAs and post such a strong performance mainly due to three reasons — robust internal generation, capital infusion of Rs 7,900 crore by the government and most importantly, the mega effort in optimizing capital. This gives us the confidence that we can handle this situation and there is a rising trend in the net profit," he added. 

    On yearly basis, the bank has reported a jump of over 41% in their net profit at Rs 11,707 crore in FY12 compared to Rs 8,265 crore in FY'11. 

    Strong core performance was mainly aided by robust NIM, despite moderate growth in loan book. Stable asset quality is very comforting and makes us believe that things are likely to improve, going forward" said Saday Sinha, banking analyst with Kotak Securities. 

    Net interest income or the difference between interest earned and paid out went up more than 45% to Rs 11,704 crore on a year-on-year (YoY) basis. Other income rose 9% y-o-y to Rs 5,264 crore. 

    Chaudhuri pointed out that the bank is sitting on healthy tier -I capital adequacy ratio (CAR). 

SBI to ask Moody's for 

upgrade: Chaudhuri 

Sitting on a healthy tier-I capital adequacy ratio of 9.79%, SBI chairman Chaudhuri on Friday said the bank will ask rating agency Moody's Investors Services to review and rerate the biggest PSU lender. The bank was downgraded by Moody's in October because of its thin capital base and worsening asset quality. SBI's financial strength rating (BFSR), or stand-alone rating, was downgraded to D+ from C-. The revised rating maps to a baseline credit assessment (BCA) of Baa3.