SBI net profit surges 67% to record Rs 7,627 crore in Sept quarter

The country’s largest lender State Bank of India (SBI) reported a 67 per cent year-on-year (YoY) jump in net profit at Rs 7,627 crore in the July-September quarter (Q2 of FY22), aided by lower loan loss provisions.

This is the highest ever quarterly net profit for the bank. In the year-ago period, it had posted a net profit of Rs 4,574 crore.

Net interest income of the lender jumped 10.65 per cent YoY to Rs 31,184 crore from the same period last year. Sequentially, it was up 12.83 per cent. Domestic net interest margin, a measure of profitability, stood at 3.5 per cent in Q2 of FY22, up 16 bps YoY and 35 bps sequentially. Other income — fees, sale of investments, recoveries and forex income — fell by 3.75 per cent to Rs 8,208 crore in Q2 of FY22 from Rs 8,528 crore in Q2 of FY21.

HDFC Bank had reported its highest ever quarterly net profit of Rs 8,834 crore in the July-September period, which is higher than what SBI registered.

Loan loss provisions of the bank were down 52 per cent YoY and 46 per cent sequentially to Rs 2,699 crore. It is holding Covid-related provisions to the tune of Rs 6,000 crore and by the year-end, the management said, it will take a call if the provisions can be written back.

Separately, the lender has fully provided an amount of Rs 7,418 crore due to change in family pension rules, even as the regulator granted dispensation to amortise in 5 years.

The bank has restructured loans worth Rs 17,317 crore under the regulator’s second Covid restructuring window and Rs 12,931 crore worth of restructuring was done under the first window.

This took the total Covid restructuring to Rs 30,312 crore, of which, Rs 15,099 crore was from retail, Rs 10,153 crore from small and medium enterprises (SMEs), and Rs 5,060 crore from the corporate segment.

Slippage for the quarter dropped 73 per cent sequentially to Rs 4,176 crore from Rs 15,666 crore. Consequently, asset quality of the lender improved both sequentially and YoY as gross non-performing assets (gross NPAs) stood at 4.9 per cent at the end of the September quarter. It was 5.32 per cent in the preceding quarter and 5.28 per cent in the year-ago period. Net NPAs also came in lower at 1.52 per cent.

Also, the lender saw recoveries and upgrades to the tune of Rs 7,407 crore in Q2 of FY22, compared to Rs 4,038 crore in Q2 of FY21, and Rs 4,969 crore in Q1 of FY22.

“In Q1, we had slippages on the retail side and we have pulled them back. This is the reason for much lower slippages this quarter. Also, the accounts are performing well now. Our connect on the ground has improved, and has led to lower slippages. Now, our collection efficiency stands at 95 per cent,” said Dinesh Kumar Khara, chairman, SBI.

The bank’s domestic advances grew by 4.61 per cent YoY and overall advances went up 6.17 per cent to Rs 25.3 trillion, mainly driven by personal retail advances and foreign office advances.

Domestic corporate advances saw a 4 per cent de-growth but retail advances were up 15 per cent. Home loan, which constitutes 24 per cent of the bank’s domestic advances, has grown by 10.74 per cent YoY.

Khara said the bank has got undisbursed term loans to the extent of 27 per cent. Also, almost 50 per cent of the working capital limits for large corporates are unutilised. The lender has a working capital pipeline of Rs 1.15 trillion and undisbursed term loans are as high as Rs 2.25 trillion.

“But we will see some utilisation of term loans because there is clear visibility of demand and capacity augmentation is also happening. I hope by the end of this quarter or Q4, there will be significant improvement in capacity utilisation, which will lead to availability of term loans and working capital loans,” he added.

The bank expects capacity addition in the iron & steel sector. Even oil companies may start availing their working capital limits, it said. Also, all metal sectors are seeing an uptick. Khara said the bank would like to see advances touch 10 per cent by the end of FY22 but much of it would be a function of the real economy.

The retail segment may grow faster than what it has grown. As far as the corporate segment is concerned, the lender has seen decent demand this month. “And, if this trend continues, hopefully, we will be in a position to see decent numbers. The unutilised working limit level may come down from 50 per cent to 30-35 per cent in FY22,” Khara added.

Total deposits of the lender grew at 9.77 per cent YoY to Rs 38.09 trillion. Domestic current account savings account (CASA) grew 11.75 per cent to Rs 17.06 trillion. On Wednesday, the lender’s stock on the BSE closed at Rs 530.65, 1.72 per cent higher than the previous day’s close.