State Bank Of India Net Profit Jumps 74% In Q2

SBI Q2 profit beats estimates as core income rises, bad loan provisions drop

<div class="paragraphs"><p>State Bank of India building. (Photo: BQ Prime)</p></div>
State Bank of India building. (Photo: BQ Prime)

India's largest lender State Bank of India posted highest ever quarterly profit in the second quarter. The bank reported an 74% year-on-year rise in its net profit for the quarter ended September 30, as core income soared and bad loan provisions dropped. This

Net profit for the quarter stood at Rs 13,264.5 crore, compared with Rs 7,627 crore a year ago. On a quarter-on-quarter basis net profit more than doubled. Analysts polled by Bloomberg estimated a net profit of Rs 10,204 crore for the second quarter.

In the July-September quarter 2021-22, SBI also reported Rs 7,418 crore worth exceptional items being entire additional liability of Rs 7,418.4 crore, which had reduced the profit figure. Even in the June quarter this year, SBI reported a sharp drop in other income owing to mark to market provisions against treasury losses.

Net interest income, or core income, stood at Rs 35,183 crore, up 13% year-on-year. Other income rose 8% from a year ago to Rs 8,874 crore.

Asset quality conditions improved for the bank with gross non-performing asset ratio at 3.52% as of September 30, down 39 basis points sequentially. Net NPA ratio for the quarter stood at 0.8%, compared with 1% as of June 30.

"Our endeavour is to keep the gross NPA number as low as possible," said Dinesh Khara, chairman, SBI.

Bad loan provisions for the quarter fell 26% year-on-year to Rs 2,010 crore.

Key Highlights

  • SBI gross advances rose 20% year-on-year to Rs 30.35 lakh crore, at the end of the July-September quarter.

  • Domestic corporate advances up 21.2%, retail advances up 19%.

  • Home loan portfolio up 14.57% year-on-year, at Rs 5.94 lakh crore as of September 30.

  • Total deposits at Rs 41.9 lakh crore, up 10% year-on-year.

  • Low cost current account savings account deposits stood at Rs 17.97 lakh crore, up 5.35% year-on-year.

  • SBI’s slippages fell to Rs 2,399 crore in Q2, down 42.6% year-on-year.

  • Slippage ratio improved to 0.33% in July-September, compared with 0.66% last year.

  • Upgrades and recoveries during the quarter stood at Rs 5,207 crore, which were flat quarter-on-quarter.

  • Total restructured loans fell to Rs 27,366 crore as of September 30, compared to Rs 30,960 crore as of March 31.

  • Capital adequacy ratio stood at 13.51% as of September 30, compared with 13.35% last year.

"At this rate (of capital), we can easily support the kind of credit growth which we have already planned. The other part is that we would rather like to clawback a good amount of profit. As of now we have not reckoned Rs 19,000 crore of profit that we have already earned. At this rate we would be able to clawback Rs 25,000-30,000 worth profit at the year end," Khara said.

The lender is seeing corporate credit demand from infrastructure, renewable energy and oil marketing companies. Demand from the services sector is coming from non-bank finance companies, he said.

"Going by the current trend, we will likely see a credit growth of 14-16% by the end of the year," Khara said.