India's largest bank posts profit surge

Net income for SBI climbed to S$602 million in the three months ended March 31.
Net income for SBI climbed to S$602 million in the three months ended March 31. PHOTO: REUTERS

MUMBAI • State Bank of India (SBI), the country's largest lender by assets, more than doubled fourth-quarter profit as loan growth accelerated and bad-debt provisions fell. The stock climbed to a two-year high.

Net income climbed to 28.1 billion rupees (S$602 million) in the three months ended March 31, from 12.6 billion rupees a year earlier, the lender reported yesterday.

Outstanding loans grew 7.8 per cent, faster than the previous quarter's 4.8 per cent increase, exchange filings show.

"Asset quality and loan growth positively surprised," said Mr Siddharth Purohit at Angel Broking. "The earnings trajectory seems to be turning after a very rough patch."

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In the past two years, SBI chairman Arundhati Bhattacharya has been grappling with slowing loan expansion and mounting bad loans, the key stumbling blocks to profit growth in India's banking industry.

Lawmakers recently approved a proposal giving the Reserve Bank of India more powers to resolve the nation's US$180 billion (S$250 billion) pile of stressed loans.

Provisions for bad debt dropped to 110 billion rupees in the period, from 121 billion rupees a year earlier. Gross bad loans as a percentage of total lending narrowed to 6.9 per cent from 7.23 per cent in the December quarter.

SBI had merged itself with five of its smaller units and Bharatiya Mahila Bank as of April 1, allowing it to break into the world's top 50 banks by assets.

The enlarged lender won't be growing its network of 22,500 branches for another two years, but will focus on consolidating its operations and strengthening its digital-banking initiatives, Ms Bhattacharya said in an interview earlier this month.

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A version of this article appeared in the print edition of The Straits Times on May 20, 2017, with the headline 'India's largest bank posts profit surge'. Print Edition | Subscribe