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[November 09, 2012]
SBI's operating metrics disappoint
MUMBAI, Nov 09, 2012 (Mint - McClatchy-Tribune Information Services via COMTEX) -- The worst fears about non-performing assets (NPAs) may not have come true in State Bank of India's (SBI) September quarter earnings; but an altogether different problem has cropped up.
Although the bank posted a 30% increase in net profit from a year ago, that has come entirely from a tweak in provisioning. The amount the bank set aside as provisions against NPAs is 37% lower than a year ago, even though on a year-on-year basis gross bad loans are 45% higher.
Overall, the bank added Rs.2,016 crore in gross NPAs, a relief considering the Rs.7,480 crore it added in the June quarter. On the flip side though, data on loans SBI has recast this quarter is still awaited.
However, the bank's operating performance left much to be desired. Net interest income grew only by 5.2% from a year ago and fee income declined. As a result, operating profit declined by 1.6% from a year ago.
Another piece of evidence for the shoddy operational performance is also SBI's shrinking loan book. Outstanding advances declined by 2% since the end of June, though that might not be a bad strategy to avoid bad loans in these troubled times.
But that the results are disappointing is very clear from the stock's movement. Soon after the results were announced, the scrip had lost over 3% from its previous close.
___ (c)2012 the Mint (New Delhi) Visit the Mint (New Delhi) at www.livemint.com Distributed by MCT Information Services
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