Mumbai: The shares of State Bank of India (SBI) vaulted over 7 per cent on Friday despite posting a 32 per cent drop in net profits for the June quarter as a smaller than expected rise in bad loans triggered fresh buying interest in India’s largest state lender.
The bank’s standalone net profit for the quarter stood at Rs 2,521 crore, down 32 per cent from Rs 3,692 crore reported during the same period last year, while its gross non performing loans as a percentage of its total loans rose to 6.94 per cent in the April-June period as compared to 6.50 per cent in the previous quarter. “SBI’s 1QFY17 asset quality has surprised on the positive side.
Lower than expected slippages have helped in reporting better than expected bottom-line. Slippages of Rs 8,790 crore during the quarter was lower than our and street’s expectations. This indicates a large part of the troubled loans has been accounted as non-performing assets (NPAs),” said Siddharth Purohit, senior equity research analysts, Angel Broking.
While one cannot generalise that the overall PSU banks will start seeing revival, Mr Purohit said the current set of results posted by SBI shows that the management was able to sail through tough times and the asset quality could see further improvement going forward.
The strong performance reported by SBI also triggered a strong rally in other bank stocks, that helped the markets to end the week on a positive note. The Sensex soared 292.80 points or 1.05 per cent to close at 28,152.40, the Nifty gained 80 points or 0.93 per cent to end the day at 8,672.15. While SBI was the top gainer among the Sensex constituents, private sector lender Axis Bank soared 3.99 per cent and was the second biggest gainer on Friday.
