SBI Q4 Results: Net Profit Up 41% On Higher Core Income, Lower Provisions
SBI's Q4 net profit was below analyst expectations on lower other income.
State Bank of India saw its net profit rise 41% year-on-year in the quarter ended March, owing to higher net interest income and lower provisions. Other income, however, fell compared to a year ago.
India's largest lender's net profit for the quarter stood at Rs 9114 crore compared with Rs 6,451 crore a year ago, according to its exchange filing. Analysts tracked by Bloomberg had estimated a net profit of Rs 10,183 crore for the quarter.
Net interest income, or core income, for the bank rose 15.3% year-on-year to Rs 31,198 crore. Other income fell 27% to Rs 11,880 crore.
The bank's net interest margin for its domestic business stood at 3.40%, up 29 basis points over a year ago.
There has been a sharp pickup in economic momentum since January 2022 and credit demand has risen too, said Dinesh Khara, chairman, SBI, at a press conference. Against that backdrop, the bank aims to raise its return-on-equity to 15% from 13.9% currently, Khara said.
Asset Quality
The bank's asset quality position improved.
Its gross non-performing asset ratio stood at 3.97% in the fourth quarter compared with 4.5% as of Dec. 31, 2021. Net NPA ratio improved 32 basis points sequentially to 1.02%.
Provisions for the quarter stood at Rs 7,327 crore, down 34% from a year ago.
Exposure to accounts restructured but classified as standard stood at Rs 30,960 crore. A bulk of these loans are personal and small business loans.
The slippage ratio, or fresh bad loans, was at 0.43% this quarter, marginally higher than the last three-month period's 0.37%.
The restructured book, according to Khara, is behaving well. The bank expects slippages to remain in check, he said.
Business Growth
Domestic advances for the bank rose 10.27% compared to a year ago, with a bulk of the growth still coming from retail loans.
Retail personal advances rose 15% year-on-year, with the bank now holding a retail loan book of over Rs 10 lakh crore. Home loans, which make up 23% of the bank's loan book, grew 11.4% year-on-year.
Corporate advances rose 11% over a year ago. In the corporate segment, infrastructure loans rose 8.5% over a year ago, with telecom sector loans up 42% and road sector loans up 10%. Aviation, tourism and engineering were other sectors that saw strong growth in lending.
The bank is seeing traction in corporate credit, Khara said. In particular, working capital demand has risen due to higher inflation. The infrastructure loan book is driving corporate credit, he said.
The bank's deposit base grew 10%, with low-cost current account and savings account deposits making up 45.28% of its total deposits as on March 31, 2022.
While credit growth is picking up and deposit growth slipping, Khara expects the former will outstrip the other in the coming quarter.
Digital Ventures
On the digital banking vertical YONO, Khara said the bank has no plans to spin it out separately. The intention is to develop it to support the bank's business, he said.
As part of its disclosures, SBI said it has made an additional fund infusion into Jio Payments Bank. Since SBI is the minority partner in the bank, it is not driving strategy for the entity, he said. "Looking at the investments being made, it does not look like the plan has been shelved."