SBI Q3 Results: Net Profit Up 62% YoY On Lower Provisions

Customers wait in line at a State Bank of India branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

State Bank of India Ltd., the country's largest lender, saw its October-December quarter profit rise on lower provisions.

Net profit for the quarter rose 62% year-on-year to Rs 8,432 crore. This compares with a Rs 8,259-crore estimate by analysts tracked by Bloomberg.

Net interest income for the quarter rose by 6.5% from a year ago to Rs 30,687 crore. Other income for the quarter fell 6.2% to Rs 8,673 crore crore.

According to Chairman Dinesh Khara, the bank's NII growth has been under pressure due to high liquidity in the system. Khara said as the external benchmark linked lending rates go up, the NII should improve going ahead.

Total provisions for the third quarter stood at Rs 6,974 crore, down 32.5% from a year ago. This was mainly because in December 2020, the bank had made provisions worth Rs 6,510 crore toward the 11th Bipartite Wage Settlement. Provisions against bad loans, however, increased by 35% year-on-year to Rs 3,096 crore during the third quarter.

Asset quality for the quarter improved as gross non-performing asset ratio fell by 40 basis points on a quarter-on-quarter to 4.5% as of December 31, 2021. Net NPA ratio too fell 18 basis points sequentially to 1.34%.

Slippages during the quarter stood at Rs 2,334 crore, as compared to Rs 237 crore in Q3 FY21. On a sequential basis though, slippages fell 44%.

Under the Reserve Bank of India's two Covid restructuring schemes, SBI has restructured loans worth Rs 32,895 crore, which constituted 1.2% of its loan book.

The bank made additional provisions worth Rs 1,700 crore toward its restructured loans, owing to a large retail company exposure. Future Retail Ltd had informed exchanges that it has not been able to repay Rs 3,500 crore to its lenders as of Jan 1, as was required under the one time restructuring scheme.

SBI Q3 Highlights

Total advances for SBI rose 8.5% year-on-year to Rs 26.64 lakh crore.
Domestic corporate advances remained flat at Rs 7.83 lakh crore.
Domestic retail advances rose 14.57% to Rs 9.52 lakh crore. Of this, home loans constituted Rs 5.38 lakh crore, up 11% year-on-year.
Total deposits grew 8.83% from a year ago to Rs 38.47 lakh crore.
Low cost current account savings account deposits stood at Rs 17 lakh crore as of Dec 31 and constituted 45.74% of total deposits.

According to Khara, SBI has seen an improvement in the utilisation of loan limits by corporate borrowers.

"The underutilisation in working capital limits has come down from 51-52% in Sept 2021 to about 43% now. Similarly in term loans, the underutilisation level has come down to 22%. So this shows a lot of positive traction," Khara told reporters on Saturday.

This financial year, the bank expects to report 9% year-on-year credit growth, as compared with the previous guidance of 8.5%.