India’s largest public sector bank, State Bank of India (SBI) has reported a net profit of Rs 3,752 crore for the quarter ended June. This confirms an increase of 137% over the net profit for the corresponding period last year.
The surge in non-performing assets is accompanied by disappointment among investors with the stock closing down 4.3% at Rs 1,888. SBI chairman Pratip Chaudhuri acknowledged that their expectations of bad loans to peak turned out to be wrong.
He said, “Although loans of over Rs 6,700 crore slipped into the non-performing assets category, this quarter, the bank had seen upgrades of loans worth Rs 1,600 crore. Of the remaining Rs 5,000-odd crore, Rs 2,000 crore of loans are already on the mend but we could not give shape to them in the quarter," he said.
Chaudhuri added that given the slowdown in the corporate sector, the bank was focusing on home and auto loans to generate credit growth. "We expect inward migration of home loans (from other lenders) to pick up as our new rates are the most competitive," said Chaudhuri.
He said that the bank was protecting its spread by eliminating dependence on wholesale funds and reducing its investments in government bonds.