SBI Q2 earnings: State Bank of India’s profit soars 67% as provisions slide

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November 04, 2021 4:45 AM

“The first quarter saw an elevated level of fresh slippages as collections were severely impacted due to restrictions on mobility and concerns around health and safety of our staff as well as customers. However, our ground level forces have rallied back in the second quarter,” Khara said.

Slippages in Q2FY22 stood at Rs 4,176 crore, as against Rs 15,666 crore in the June quarter and the slippage ratio was 0.66% for the quarter.Slippages in Q2FY22 stood at Rs 4,176 crore, as against Rs 15,666 crore in the June quarter and the slippage ratio was 0.66% for the quarter.

State Bank of India’s (SBI) standalone net profit rose 67% year-on-year (y-o-y) to Rs 7,627 crore in Q2FY22 driven by an improvement in asset quality and a sharp drop in provisions. Dinesh Khara, chairman of SBI, said that after the Covid second wave receded, the asset quality outcomes in the September quarter turned out to be quite encouraging.

“The first quarter saw an elevated level of fresh slippages as collections were severely impacted due to restrictions on mobility and concerns around health and safety of our staff as well as customers. However, our ground level forces have rallied back in the second quarter,” Khara said.

Slippages in Q2FY22 stood at Rs 4,176 crore, as against Rs 15,666 crore in the June quarter and the slippage ratio was 0.66% for the quarter. Provisions dropped 98% y-o-y to Rs 189 crore and the credit cost stood at 0.43%. The gross non-performing asset (NPA) ratio fell 42 basis points (bps) sequentially to 4.9% and the net NPA ratio was down 25 bps at 1.52%. SBI’s total restructured book for resolution of Covid-related stress stood at Rs 30,312 crore, accounting for 1.2% of its loan book.

Khara said that loans which in Q1 had turned delinquent in the home loan and Xpress credit personal loan segments saw a pullback in Q2. In the small and medium enterprises (SME) segment, the bank was able to pull back or restructure loans as per the revised guidelines. “With the economic activity coming back, cash flows are restored and we are in a position to see better behaviour as far as borrowers are concerned. No major concerns are there related to asset quality because the underwriting has improved significantly and the collection machinery on the ground has become activated very well,” he added.

SBI’s net interest income (NII), or the difference between interest earned and expended, rose 10.7% y-o-y to Rs 31,184 crore. The net interest margin (NIM) rose 17 bps sequentially to 3.09%.

The bank’s gross advances grew 6.17% y-o-y to Rs 25.31 lakh crore as on September 30, 2021. Retail loans grew 15.2% y-o-y, while the corporate loan book shrank 4%. Khara said that working capital limits for large corporates are unutilised to the extent of 50%. However, SBI has a pipeline of Rs 1.15 lakh crore and it expects that term loans to the tune of Rs 2.25 lakh crore will be availed by companies. Sanctions worth Rs 4.6 lakh crore are still waiting to be availed, he said.

“As far as our overall advances growth is concerned, it stands at over 6% and we would like to see it growing up to 10%. Much of it could be a function of the real economy,” Khara said, adding that retail loans will continue to grow at a faster pace, going by the early signs seen in October. “This month we have seen decent demand from corporates too, and if that continues, we should be in a position to see decent numbers. The unutilised loan limits might decline from the current 50% to 30-35%,” he said.

Deposits grew 9.8% y-o-y to Rs 38.1 lakh crore as on September 30, with the current account savings account (CASA) ratio up 85 bps y-o-y at 46.24%.

SBI’s shares ended 1.14% higher than their previous close on the BSE at Rs 527.65 on Wednesday.

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