SBI profit up 74%  at Rs 13,265 crore | The Financial Express

SBI profit up 74%  at Rs 13,265 crore

The healthy growth in quarterly profit came from strong interest income growth owing to a sharp increase in credit expansion

SBI profit up 74%  at Rs 13,265 crore
The bank’s provisions fell 25% y-o-y to `2,011 crore in Q2FY23 due to improving asset quality

State Bank of India (SBI) on Saturday said its July-September quarter standalone net profit jumped 74% y-o-y to Rs 13,265 crore — the highest ever in a quarter. This was significantly higher than Bloomberg’s estimates of Rs 10,262 crore. The country’s largest lender had earned a profit of Rs 7,627 crore in the same quarter a year ago.

The healthy growth in quarterly profit came from strong interest income growth owing to a sharp increase in credit expansion. The bank’s net interest income (NII) improved 13% y-o-y owing to a strong 20% increase in credit growth, almost 200 basis points (bps) higher than the industry average.

The loan growth was on account of both retail and corporate segments, with corporate loan growth rising faster at 21% (`7.6 trillion) as against retail loan growth of 19% y-o-y, led by home loans.

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The bank’s provisions fell 25% y-o-y to Rs 2,011 crore in Q2FY23 due to improving asset quality as the net non-performing asset (NPA) ratio fell to sub 1% level.

The lender saw 17% y-o-y increase in its pre-provisioning operating profit (PPOP) to Rs 21,120 crore led by fee income, which grew by 10%, along with forex and cross-selling income. The bank made recoveries of Rs 1,803 crore in Q2FY23. 

SBI chairman Dinesh Khara has revised the credit growth guidance upwards to 14-16% for FY23 from 10-12% earlier, as the bank is seeing an improvement in capacity utilisation of the corporate sector. Khara said going ahead, the bank has a strong corporate credit pipeline of Rs 3.7 trillion consisting of both term and working capital loans.

“This quarter was a busy season. That is why we had strong credit growth. But I still expect, going by the current trend, we should have credit growth of 14-16% in the current financial year,” he said in the post-earnings conference.  

Domestic net interest margin (NIM) expanded by five bps to 3.55% as of September 30. Without giving any specific guidance on margin, Khara said the bank is aiming at maintaining current levels as there are many factors at play and the situation is very dynamic.

On the deposit side, the bank saw a 10% growth to Rs 38.1 trillion, merely half compared to the credit growth. The growth in deposits came mainly from term deposits while current account, savings account (CASA) ratio declined 161 bps y-o-y to 44.63% as of September 30.

As of now, the bank is using excess SLR to fund its credit growth. The bank has excess SLR to the tune of Rs 3.8 trillion.

On the asset quality front, the gross NPA ratio was at 3.52% as of September 30, lower by 138 bps y-o-y and 39 bps sequentially while net NPA ratio was at 0.80%, lower by 72 bps y-o-y and 20 bps q-o-q. The provision coverage ratio (PCR) was at 77.93% as of September 30, higher by 788 bps y-o-y. 

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First published on: 06-11-2022 at 06:00 IST