State Bank of India (SBI), the country’s largest lender, on Saturday announced a marginal 1% year-on-year (y-o-y) increase in net profit to Rs 17,035 crore for the June quarter, impacted by rise in provisions for non-performing assets (NPAs). The lender surpassed street expectations as Bloomberg estimates had pegged the profits at Rs 16,595 crore.

Total provisions of the bank rose 38% y-o-y to Rs 3,449.42 crore while loan loss provisions surged 70% to Rs 4,518 crore during the quarter.

“There was an increase in provisions due to ageing of loans. We will get to see improvement in interest margins from the second quarter onwards,” said chairman Dinesh Khara in an earnings call.

Net interest income, the difference between interest earned and paid, rose 5.7% to Rs 41,125.5 crore in the June quarter of the current fiscal from Rs 38,905 crore in the same quarter of the previous fiscal.

The net interest margin (NIM) of the lender shrunk to 3.35% in the first quarter from 3.47% in the same quarter of the previous year. “Effort is there to protect NIM as much as possible. My expectation is that we should be in a position to operate between 3.2% and 3.4%,” Khara said.

Khara, whose tenure as chairman is ending in a few weeks, said his wish was to see the bank generating net profit of Rs 1 trillion. “I hope we will get to see it by the end of the 2024-25 financial year,” he said.

“In the past four years, we generated net profit of over Rs 1.6 trillion, higher than the net profit of Rs 1.4 trillion in the past 60 years,” he said.

Its advances grew by 15.39% year-on-year to Rs 38.12 trillion as of June-end, driven by a healthy growth in SME and agriculture loans. The deposits grew by 8.18% year-on-year to Rs 49.01 trillion as of June-end. The current account saving account (CASA) ratio fell to 40.70% as on June 30, from 42.88% a year ago and 41.11% sequentially. Non-interest income fell 7.5% to Rs 11,162 crore in the June quarter.  

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The asset quality of the country’s largest lender showed some improvement with its gross non-performing assets (NPA) ratio of the bank at 2.21% of total loans as of June 30, as compared to 2.76% as of June 30, 2023, according to an SBI statement.

Net NPA of the bank stood at 0.57% as of June 30, as against 0.71% as of June 30, 2023.

In absolute terms, gross NPAs came down to Rs 84,226.04 crore as on June 30, from Rs 91,327.84 crore as on June 30, 2023. The net NPA fell to Rs 21,554.69 crore as of June 30, from Rs 22,995.37 crore as of June 31, 2023. The slippage ratio of bad loans for Q1FY25 improved by 0.1% at 0.84%.