SBI Q4 Results: Profit More Than Quadruples Aided By One-Time Gain

State Bank of India's quarterly profit quadrupled over a year ago, aided by weak profitability in the year-ago quarter and proceeds from a stake sale in its payments subsidiary.

Net profit rose to Rs 3,580.8 crore in the January-March quarter compared to Rs 838.4 crore, according to an exchange filing. That compares with the Rs 6,169-crore consensus estimate of analysts tracked by Bloomberg. This quarter's net profit includes a one-time benefit of Rs 2,731 crore from sale of stake in SBI Cards & Payment Systems.

The state-run bank's net interest income fell less than a percent year-on-year to Rs 22,766 crore. Analysts had forecast NII at Rs 25,403 crore.

SBI's asset quality improved over the January-March quarter. Gross non-performing assets fell 6.6% over the preceding quarter to Rs 1,49,091 crore. The gross NPA ratio stood at 6.15% as of March 2020 compared with 6.94% a quarter ago. The net NPA ratio stood at 2.23% against 2.65% in the previous quarter.

• Slippages fell to Rs 8,150 crore from Rs 16,525 crore in the preceding quarter. But it rose compared to Rs 7,505 crore a year ago.
• The bank set aside Rs 11,893 crore as provisions against bad loans in the fourth quarter, compared to Rs 8,193 crore in the previous quarter.

Moratorium Impact

About Rs 6,250 crore worth of loans were set to be downgraded as non-performing assets in March. Since the Reserve Bank of India has allowed banks to offer a six-month repayment moratorium till Aug. 31, they have been classified as in standstill. According to SBI Chairman Rajnish Kumar, the bank has already set aside 15% provisions against these accounts.

The public sector lender has been conducting an internal analysis of the quality of its books and is reasonably confident of withstanding asset quality pressures owing to the national lockdown, he said.

The bank expects slippages in these accounts to start in September after the moratorium ends in August, Kumar said. “We'll not wait till then. We will start providing against moratorium accounts in June itself.”

And since the bank has been actively providing against stressed loans over the last few quarters, it doesn't expect a large hit on its balance sheet in the ongoing fiscal. Kumar, however, didn't offer any guidance on the bank's performance citing uncertainties that are still in play.

“It will be at least another quarter before we're able to accurately estimate the stress owing to the lockdown,” he said. “As per our analysis, if things are good, we might repeat our performance of FY20, if things are a little bad then we repeat FY19 performance and if things go worse, then FY18 performance.”

SBI had reported a net profit of Rs 862 crore in FY19 and a net loss of Rs 6,547 crore in FY18.

The bank estimates that nearly 82% of its borrowers have paid two or more installments since March 31, while 92% have paid at least one installment. In case of its corporate loan book, only 13% borrowers by number have opted for the moratorium, Kumar said. And no corporate borrower is among the accounts under standstill, he said.

Kumar, however, didn't specify the total amount of loans under moratorium at present.

In the unsecured loan portfolio, 5% of SBI's borrowers have availed the moratorium, with the rest paying at least two installments since March 31, he said.

Loan Book And Deposits

SBI's total advances stood at Rs 24.22 lakh crore, up 5.64% year-on-year. Deposits stood at Rs 32.41 lakh crore, up 11.34% year-on-year.

Kumar said SBI had budgeted a 12 percent growth in its loan book in the ongoing fiscal. This seems unlikely now, since economic activity has reduced significantly.

“The bank's policy to diversify its industry-wise exposure and the decision to not take any large exposures toward corporate borrowers will help us manage our asset quality this year,” Kumar said.