SBI reports 30% jump in quarterly net profit, bad loans also surge

SBI reports 30% jump in quarterly net profit, bad loans also surgeState Bank of India (SBI), the country's largest lender, on Friday reported a bigger-than-expected increase of 30 per cent in second quarter net profit even as bad loans piled up.

The state-run lender revealed that its net profit jumped to Rs 3,658.14 crore in the three months to September 30, from Rs 2,810.43 crore in corresponding period of last fiscal. The net profit figure exceeded analysts' average projection of Rs 3,504.7 crore.

The lender's net profit, on a consolidated basis, climbed from Rs 3,470 crore to Rs 4,575 crore.

Gross non-performing assets (NPAs) jumped from 4.19 per cent second quarter of 2011-12 to 5.15 per cent in the same quarter of this year. In terms of percentage, only Central Bank of India has reported higher gross NPAs than SBI.

Research Vice President Vaibhav Agarwal, of Angel Broking Ltd, said that the increase in net profit was less of a factor to applaud about compared with the level of rise in bad loans.

Speaking on the topic, Agarwal said, "We see no respite as far the bad loan situation is concerned at least in the next two quarters."

In absolute terms, SBI's gross NPAs jumped from Rs 47,156.38 in the June quarter to Rs 49,202.46 crore in the September quarter. The lender's exposure to grounded carrier Kingfisher Airlines is Rs 1,200 crore. The lender set aside Rs 1,828.6 crore to cover bad loans.

The better-than-expected quarterly net profit failed to motivate investors. Stock in SBI slipped 3.89 per cent to close at Rs 2,156.35 a share on the Bombay Stock Exchange (BSE).