State Bank of India profit jumps as bad loan provisions drop

BENGALURU, (Reuters): State Bank of India (SBI) on Friday reported its biggest ever quarterly profit on lower bad loan provisions and better asset quality, sending its shares up over 3%.

Net profit jumped to INR 55.83 billion ($785.56 million) in the three months to 31 Dec., from INR 39.55 billion a year earlier. That missed analysts’ estimates for a profit of INR 63.34 billion, according to Refinitiv data, due to a higher tax expense.

Provisions for bad loans dropped 41.4%, while gross bad loans as a percentage of total loans, a measure of asset quality, slipped to 6.94% at December-end from 7.19% in the immediately previous quarter, the Mumbai-based bank said in a regulatory filing.

SBI’s shares rose as much as 3.5% in a Mumbai market that was trading 0.1% lower as of 0830 GMT. Quarterly net interest income rose 22.42%, while net interest margin, a key indicator of a bank’s profitability, rose to 3.59%, up 37 basis points from the previous quarter.

Slippages, or fresh addition of bad loans, surged to INR 165.25 billion from INR 88.05 billion in the previous quarter, due to a INR 70 billion exposure to a large housing finance company, SBI said.