The country’s largest bank, State Bank of India (SBI), on Friday, announced a smart 68% year-on-year jump in net profit for three months ended December 31 to Rs 14,205 crore — the highest ever quarterly profit — on the back of a decline in its provisions and boost in interest income. The bank’s bottomline was significantly higher than the estimated net profit of Rs 13,212 crore, as per a poll of 18 brokerages conducted by Bloomberg.
The bank‘s provisions fell 17% y-o-y to Rs 5,761 crore in Q3FY23 led by improvement in asset quality.
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Net interest income rose 24% y-o-y to Rs 38,069 crore in Q3FY23 while domestic net interest margin (NIM) expanded 29 basis points (bps) to 3.69% as of December 31. “The bank is in a position to maintain its margin on account of savings deposit growth and by deploying excess liquidity,” Dinesh Khara, Chairman, SBI, said in a post earnings call. The bank has excess liquidity to the tune of Rs 3.2 trillion, he added.
The lender saw a near 18% growth in its gross advances to Rs 31.3 trillion as of December 31 while deposit growth lagged at 9.5% to Rs 42 trillion. While SBI’s deposit growth is in line with industry growth, the bank is seeing a good growth in savings deposits, Khara said. Deposit growth was led by term deposits, which increased by 11%, while its CASA ratio declined by 126 bps y-o-y to 44.48% as of December 31.
“As of now, we are comfortably placed to ensure that we are able to support balance sheet growth as far as the loan book is concerned,” he said.
The bank’s domestic advances growth was driven by retail and corporate portfolio, which each grew by 18%. Home loans, which form a major part of the retail loan book, of the bank, grew by 13% y-o-y.
At an operational level, the bank reported a 36% increase in its pre-provisioning operating profit (PPOP) to Rs 25,219 crore in Q3FY23. The bank saw a 32% increase in its non interest income to Rs 11,468 crore.
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On the asset quality front, the bank’s gross non-performing asset (NPA) ratio stood at 3.14% as of December 31, down 136 bps y-o-y and 32 bps q-o-q while net NPA ratio fell 57 bps y-o-y and 3 bps sequentially to 0.77%. Provision coverage ratio stood at 76.12% as of December 31, higher by 490 bps. The bank’s fresh slippages stood at Rs 3,098 crore in Q3FY23 while total reductions in NPAs, including recoveries and upgrades stood at Rs 11,667 crore during the quarter.
The bank’s capital adequacy ratio stood at 13.27% as of December 31 as compared to 13.23% a year ago.