SBI Q3 profit jumps 62 pc to Rs 8,432 cr on lower provisions

The country's largest lender State Bank of India (SBI) on Saturday reported 62.27 per cent jump in standalone net profit at Rs 8,432 crore for the quarter ended December 2021, helped by lower provisions.

This is the highest ever quarterly profit reported by the lender.

SBI had posted a standalone net profit of Rs 5,196 crore in the same period of 2020-21.

Chairman Dinesh Khara said the bank has delivered consistently improving outcomes in the business, profitability and asset quality parameters.

“We have a decent interest income. Treasury income has been a bit of an issue but nevertheless in the other income we have seen a good trend and also lower provisions because of the better asset quality,” Khara told reporters.

It has created sufficient contingency provisions against the restructured book to insulate the balance sheet from any future shocks arising out of uncertainties.

During the quarter, the bank made an additional provision of Rs 1,700 crore as a prudent measure, he said.

Net interest income (NII) increased 6.48 per cent to Rs 30,687 crore in the quarter.

Domestic net interest margin (NIM) improved to 3.40 per cent as against 3.34 per cent in the year-ago period.

Gross non-performing assets (GNPA) ratio reduced to 4.50 per cent from 4.77 per cent. Net NPA ratio stood at 1.34 per cent as against 1.23 per cent.

“We don't have any challenge on the asset quality front. We have adequately insulated our balance sheet from any future shocks also,” Khara said.

Slippage ratio for the quarter was at 0.37 per cent and credit cost stood at 0.49 per cent. Fresh slippages in the quarter were at Rs 2,334 crore. Recovery and upgradation stood at Rs 2,306 crore as against Rs 5,657 crore in the year-ago quarter.

“While the elevated level of slippages in the first quarter of the year was due to the exceptional circumstances, we have been able to pull back a significant amount of those slippages which indicate that our long-term strategy for maintaining asset quality through quality credit underwriting using analytics for early warning signals and focus on collections have now started delivering consistent results,” Khara added.

The bank's restructuring under COVID resolution plan-1.0 and 2.0 stood at Rs 32,895 crore, which is 1.2 per cent of the loan book.

Provision coverage ratio (PCR) as at December-end quarter stood at 88.32 per cent.

Total provisions declined to Rs 10,090 crore from Rs 12,137 crore in the year-ago period, as per the analyst presentation uploaded on the exchanges.

Capital adequacy ratio as at the end of December quarter was at 13.23 per cent.

“We expect that our internal accruals will be sufficient to take care of the normal growth requirement,” Khara said.

Gross advances grew 8.47 per cent to Rs 26,64,602 crore. Domestic advances growth stood at 6.47 per cent year-on-year (YoY), driven by growth in personal retail advances (14.57 per cent). Home loan, which constitutes around 24 per cent of the bank's domestic advances, rose 11.15 per cent.

Growth in the corporate and SME segment also picked up during the third quarter.

“As far as the corporate side is concerned, I would like to mention that there is a definite improvement in terms of the utilisation of limits. As compared to September 2021, the unutilised portion has come down from 52 per cent (working capital) to about 43 per cent now,” he said.

Even in term loans, the undisbursed portion has come down on a year-on-year basis, from about 23 per cent in December 2020 to about 22 per cent now. This is a clear sign of the better utilisation of sanctioned limits, he said.

Khara said the bank has got an unutilised portion in the corporate credit of about Rs 2.06 lakh crore for working capital and Rs 1.99 lakh crore in term loans.

“The trend we have seen in the month of January is that we have seen a growth of Rs 50,000 crore in advances. I am quite confident that going forward we will have a decent growth in corporate credit and I do not envisage any challenge on this,” he said.

Bank's credit growth is likely to be at 9 per cent by the end of the current fiscal year, Khara said.

Total deposits grew at 8.83 per cent. Khara said the bank is exploring opportunities in the overseas market for augmenting its income scheme such as merchant banking activities and factoring business, among others.