SBI Q2 Results: Net Profit Rises 67% On Higher Core Income, Lower Provisions

India's largest lender saw its second-quarter net profit rise on higher core income and lower provisions.

Net profit of State Bank of India jumped 67% year-on-year to Rs 7,626.5 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 7,546-crore consensus estimate of analysts tracked by Bloomberg.

Net interest income, or core income, rose 11% over a year ago to Rs 31,184 crore.

Asset Quality Improves

The bank's gross non-performing asset ratio stood at 4.9% as on Sept. 30 compared with 5.32% as of June. Net NPA ratio fell 25 basis points sequentially to 1.52%.

In the second quarter, the bank reported:

• Gross slippages worth Rs 4,292 crore compared with Rs 3,085 crore a year ago and Rs 16,298 crore in the April-June period.

• Recoveries and upgrades worth Rs 7,407 crore compared with Rs 4,038 crore a year ago and Rs 4,969 crore in the preceding three months.

• Agricultural segment had an NPA ratio of 14.8%, SME was at 8.1%, corporate at 7.62% and retail at 4.51%.

Under the Reserve Bank of India's second Covid-19 restructuring window, the bank had restructured loans worth Rs 17,317 crore compared with Rs 12,931 crore restructured under the first window.

"There are no major asset quality concerns. We have improved our underwriting standards. But more than that we have strengthened our recovery machinery," said Dinesh Khara, chairman of SBI.

According to Khara, the bank has been strengthening its captive call centres and has enhanced phone-based follow-ups with customers over ten fold in the last few months. The bank has also been making calls to customers before default to ensure repayments are done on time.

Provisions against bad loans for the quarter stood at Rs 2,699 crore, down 52% over a year ago.

Advances & Deposits

Total advances for SBI rose 6.7% year-on-year to Rs 25.3 lakh crore. Total deposits were up 9.77% at Rs 38 lakh crore.

• Retail loans drove most of the credit growth, rising 15.17% from the year earlier to Rs 9.04 lakh crore.

• Corporate advances were down 4% year-on-year at Rs 7.56 lakh crore.

• Current account-savings account deposits rose 11.75% year-on-year to Rs 17.06 lakh crore.

• Term deposits were up 8% at Rs 19.38 lakh crore.

"The corporate growth has been the only challenge for us. This is due to low capacity utilisation in the corporate sector," Khara said. "That's showing signs of reversal now since companies have started borrowing more."

SBI expects to see 10% credit growth by the end of this fiscal.

Shares of SBI were trading up 2.52% as of 2:20 p.m. on Wednesday after the results were announced. That compares with a 0.35% decline in the benchmark Nifty 50.