Wages, pension dent SBI’s profit

Mumbai: India’s largest state-owned lender State Bank of India (SBI) on Wednesday reported a 35 per cent drop in its net profit for the quarter ended September 2013, its steepest fall in last two years.

The banks net profit stood at Rs 2,375 crore during the July-September period as compared to Rs 3,658 crore reported during the same period, last year. However the share prices of SBI rose 1.34 per cent as the increase in banks non-performing assets (NPA) was lower than what the markets had anticipated.

During the quarter, the bank’s net non performing loans as a percentage to its total assets stood at 2.91 per cent as compared to 2.83 per cent in quarter ended June 2013.

While announcing the bank’s quarterly performance after becoming the first woman chief of State Bank of India, Arundhati Bhattacharya attributed the steep fall in banks net profit to sharp increase in staff expenses, higher provision for wage revisions and higher retirement benefit provisions on account of change in longevity assumptions.

Bhattacharya said stress was more severe in mid corporates and large SME with power, iron and steel and infrastructure sector leading the pack.