Largest Indian bank records $430mn profit in Q1

Bloomberg

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 ($430 million) in the three months ended March 31 from 12.6 billion rupees a year earlier, the Mumbai-based lender reported. Outstanding loans grew 7.8 percent, faster than the previous quarter’s 4.8 percent increase, exchange filings show.
“Asset quality and loan growth positively surprised,” said Siddharth Purohit, a Mumbai-based analyst at Angel Broking Ltd. “The earnings trajectory seems to be turning after a very rough patch.” 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 the Indian banking industry. Lawmakers recently approved a proposal giving the Reserve Bank of India more powers to resolve the nation’s $180 billion pile of stressed loans. SBI’s fourth-quarter profit beat the 27.9 billion-rupee average of 21 analyst estimates compiled by Bloomberg.
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 percent from 7.23 percent in the December quarter.
SBI’s shares rose 2 percent to 309 rupees, the highest intraday level since March 2015, as of 2:43 p.m. in Mumbai trading, as the S&P BSE India Bankex Index gained 0.3 percent. The lender climbed 24 percent this year.
SBI had merged itself with five of its smaller units and Bharatiya Mahila Bank Ltd. 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, Bhattacharya said in an interview earlier this month.