Asset Quality Remains An Overhang For SBI In June Quarter

India's largest bank, State Bank of India (SBI) has announced its results for the first quarter of FY14 on August 12. The bank's total income stood at Rs 36192 crore, with a growth of 11.65% over that seen in the same period last year.

The bank's Interest Expended came in at Rs 20206 crore against that in Q1FY13, marking a rise of 13.53%. However, its Operating Expenses increased by almost 31% to Rs 8434 crore on a yearly basis. The higher expenses impacted the bank's operating income, which went down by 7.65% and stood at Rs 7551 crore during the quarter. Furthermore, SBI's provisions also increased by 16.67% on a yearly basis to Rs 2865 crore, but decreased by 31.45% on a sequential basis.

The increased provisions and operating expenses have eaten into the bank’s net profit. This stood at Rs 3241 crore for the quarter, with a negative growth of 13.61% YoY.

On the asset side, SBI’s Gross NPAs increased to 5.56% in Q1FY14 from 4.75% in Q4FY13, a growth of 81 basis points. Further, the Net NPAs registered a 73 basis points growth, and came in at 2.83% as against 2.10% in Q4FY13. However, its Net Interest Income increased by a mere 3.91% to Rs 11511 crore on a sequential basis and by 3.48% on a yearly basis.

The marginal increase in the bank’s NII and the drop in its provisioning may be positive for the counter. However, the stock closed down by 3.41% at Rs 1605 at closing of trades on results day.