The State Bank of India (SBI) recorded a net profit of Rs 13,264 crore for the September quarter, a 74 percent increase over the same period last year, owing to improved asset quality and solid loan growth.

The profit of the state-owned institution outperformed market expectations by a wide margin. According to a survey of eight brokerages, the net profit will be Rs 10,616.2 crore. While the sharp increase in quarterly profit is due to strong core interest income growth as a result of prudent credit expansion, there is also a base impact at work.


SBI had taken an unusual provision of Rs 7,418 crore for employee pension expenditures in the September quarter of FY22, which had reduced its profitability at the time. As a result, the net profit growth for the current fiscal year’s September quarter is greater.

Nonetheless, year-on-year loan growth of 20% increased core interest revenue and operating profit growth. SBI’s operating profit increased by 16.8 percent in the September quarter. Operating profit increased by 65.6 percent sequentially.

The largest Indian lender’s net interest income increased 12.83 percent to Rs 35,183 crore in the reporting quarter, continuing the previous two quarters’ rising trend. Interest earned by the bank increased by 15% to Rs 79,859.59 crore, while interest expended increased by 15% to Rs 44,676.15 crore, up from Rs 38,298 crore the previous year.

Gross non-performing assets at SBI were 3.52 percent of the total loan book, down from 4.90 percent the previous year. This is the bank’s lowest NPA ratio reported since FY12. The entire gross bad loan pile fell by 14% year on year to Rs 1.06 lakh crore.

In essence, a reduction in the bad loan pile as well as faster loan growth has significantly improved asset quality ratios. Bad loans were for 0.80 percent of the loan book on a net basis, up from 1.52 percent the previous year. As a result, the bank’s loan loss provisioning obligations were reduced.

SBI granted Rs 2,011 crore for bad loans in the September quarter, which was 25% less than a year ago. The bank’s slippage percentage and credit expenses have also dropped significantly over the previous year. For the reporting quarter, the slippage ratio reduced to 0.33 percent, while the credit cost dropped 15 basis points to 0.28 percent.


Chairman Statement

Chairman Dinesh Khara explained that SBI is seeing capex-related demand in corporate loans, while capacity utilization is improving. According to him, the country’s largest lender is seeing demand from the infrastructure, renewable energy, oil and marketing, and services sectors.

In the fiscal second quarter, SBI’s credit increased over 20% year on year, while domestic advances increased by 18.15 percent. Domestic advances increased due to corporate advances, which were followed by retail personal loans.

Indian banks are recuperating from the COVID-19 crisis, which resulted in the unemployment of many Indians. Credit offtake has increased dramatically as the economy has recovered. Banks are mobilizing deposits at a faster pace to fund this credit growth, despite limited banking system liquidity.

When asked about deposit growth for SBI, Khara stated that a large portion of it will be determined by how the industry expands.

In terms of bad loan guidance, the Chairman stated that SBI’s goal will be to keep bad loan ratios “as low as possible,” without providing any figures. He said the bank’s restructuring book is currently worth Rs 27,336 crore and is performing “extremely well.”

Furthermore, the bank has 14 bids on problematic loan accounts that have been handed to the National Asset Reconstruction Company Limited (NARCL). Loan accounts moved to NARCL are progressing at a “fast pace,” according to Khara. He didn’t go into detail about the predicted recovery from these accounts.

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