State Bank of India reported 74 per cent year-on-year increase in net profit at ₹13,265 crore for quarter ended September, buoyed by robust loan sales, higher interest income and lower provisions. This marks the highest ever quarterly net profit posted by the bank.
The bank’s net interest income rose by 13 per cent to ₹35,183 crore, while its operating profit expanded to ₹21,120 crore, up 17 per cent year-on-year. Robust growth in advances at ₹30,35,071 crore, up 20 per cent year-on-year boosted the bank’s financials in the September quarter.
Improvement In Key Parameters:
The bank’s gross non-performing assets (NPA) at 4 per cent or ₹1,06,804 crore and net NPA at 0.8 per cent or ₹23,572 crore was at decadal best levels. Slippages or accounts which turned bad during the quarter at ₹2,399 crore almost halved from year-ago level, while credit cost eased to 0.28 per cent in Q2. Provisioning cost during the quarter was ₹2,011 crore, down 25 per cent year-on-year. An improvement in asset quality and robust loan growth took bank’s return on assets and return on equity to a 20-year best levels of 0.76 per cent and 16 per cent, respectively. The bank’s capital adequacy ratio stood at 14 per cent and its common tier-1 capital was 10 per cent in Q2.
What Has Been Said:
The country’s largest lender said its total income increased to Rs 88,734 crore during the quarter under review from Rs 77,689.09 crore a year ago. The key net interest income rose 13 per cent to Rs 35,183 crore from Rs 31,184 crore. Of the total income, more than one-fourth or Rs 24,400 crore came from investment gains, though the bank has not booked profit from government securities in which it holds an additional exposure of over Rs 3.85 lakh crore, chairman Dinesh Kumar Khara told.
The Loan Growth: Key Indicator
Terming it one of the busiest quarters the bank has witnessed lately, Dinesh Khara, Chairman, SBI, said he expects the loan growth in FY23 to be around 14–16 per cent. This is a significant increase from the earlier estimates of 10–12 per cent.
Also, for the first time in many quarters, the bank saw its corporate advances grow faster than its retail book (including agri-loans and loans to small and medium enterprises) at 21 per cent year-on-year to ₹9,17,016 crore. Growth in the retail loan book at ₹10,74,853 crore came at 19 per cent year-on-year.
Demand for corporate loans came from infrastructure sector, oil and marketing companies and services sector mainly NBFCs. About ₹1.27-lakh crore worth of corporate loans are pending for disbursement and has a pipeline of ₹2.41-lakh crore.