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‘We Have Built Strong Immunity’, Says Chairman As SBI Trims Bad Loans In June Quarter

'We Have Built Strong Immunity', Says Chairman As SBI Trims Bad Loans In June Quarter

SBI reported an 81 per centsurge in profit in first quarter

State Bank of India (SBI) posted a sharp increase in net profit on Friday and provided a steady outlook for the coming quarters, even as the coronavirus crisis ravages the country’s economy. SBI’s results come as Indian lenders brace for a flood of potential loan defaults, with many small businesses finding it hard to operate as the pandemic crushes demand. “(It’s) safe to presume that as on June 30 we are asymptomatic and we have built strong immunity,” Chairman Rajnish Kumar said on a post-earnings conference call, citing funds the bank had set aside to cover for loan losses.

The lender reported an 81 per cent surge in profit and better asset quality as bad loan provisions dropped. Its provision coverage ratio, or the percentage of funds set aside for loan losses, was 86.32 per cent as of quarter-end compared with 83.62 per cent in the previous quarter.

Gross bad loans as a percentage of total loans eased to 5.44 per cent from 6.15 per cent in the previous quarter.

Provisions for bad loans fell 19 per cent, though the bank set aside Rs 1,836 crore in anticipation for loans that could go bad.

Around 9.5 per cent of the bank’s term loan book by value was under moratorium at June end, Kumar said, compared with 23 per cent at previous quarter’s end. The management is confident that loan recoveries will pick up from the September quarter.

Currently, no large accounts are in trouble, Kumar said.

Gains from selling a stake in unit SBI Life Insurance drove SBI’s net profit to Rs 4,189 crore for the quarter from Rs 2,312 crore a year earlier.

Net interest margin, a key indicator of profitability, rose to 3.24 per cent from 3.01 per cent.

The bank’s shares closed up 2.6% after the results in a weak Mumbai market

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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