State Bank of India Q2 profit misses estimates

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Newly appointed chairman Rajnish Kumar in his earnings call said that the bank is poised to emerge stronger in the quarters ahead as the biggest shareholder, the government agreed to invest funds to shore up its capital, helping it accelerate lending. "If you look at the bond yields, they have gone up in the recent past".

"Deposit rate unless you cut you can not cut lending rate ... for time being we are in for much more stable interest rate", he said.

There may be 10-15 basis point spike following the issuance of recapitalisation bonds leading to an increase in yield, he said on the sidelines of an event organised by Business and Youth Starting Together here.

The lenders Net Interest Income (NII) - the core income a bank earns by giving loans - increased 27.3 percent to Rs 18,585.90 crore versus Rs 14,600.16 crore past year.

Sharp decline in slippages, jump in Net Interest Income (NII) in July-September quarter sent State Bank of India's stock soaring on the Dalal Street on Friday. SBI has shown fall in gross NPAs at 9.83 per cent from 9.97 per cent QoQ. "The effort will be to strengthen it further", he added.

"Yes, this quarter we had some cushion available from the stake sale of SBI Life", he said. So, we thought it through to increase our provision coverage ratio at 65 per cent.

In line with its provisioning requirement against potential losses as directed by the RBI, State Bank has made 75 per cent of the requirement upfront in case all accounts are admitted to the NCLT. Slippages as a ratio of the total loan book fell to 1.85 per cent, from 5.37 per cent during the previous quarter.

Slippages from SBI's watchlist of potential bad loans amounted to Rs 10,424 crore, while the total watchlist stood at Rs 21,288 crore.

Slippages were under control, as gross non-performing assets (GNPA) declined sequentially from Rs 188,068 crore to Rs 186,115 crore at the end of Q2FY18. We expect asset quality to gradually improve.

Domestic net interest margin rose 9 basis points over the previous quarter to 2.59 per cent.

Instead, the NPAs worsened from a year ago, with gross NPAs at 7.14 per cent and net NPAs at 4.19 per cent as on September 2016.

State-run lenders account for the bulk of Indian banks' soured loans which were at a record 9.5 trillion rupees as of June.

Retail advances grew by 13 per cent to Rs 5,04,777 crore in September 2017.

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