Q3 performance: SBI net rises 62% on lower provisions

State Bank of India’s (SBI) standalone net profit rose 62.3% year-on-year (y-o-y) to Rs 8,431.88 crore in Q3FY22 on the back of a 33% drop in provisions to Rs 6,974 crore. The bank’s income growth was muted at 3% y-o-y.

The net interest income (NII), or the difference between interest earned and expended, rose 6.5% y-o-y to Rs 30,687 crore. SBI’s operating profit rose 6.86% y-o-y to Rs 18,522 crore. The domestic net interest margin (NIM) fell 10 basis points (bps) to 3.4%.

The bank’s gross advances grew 8.5% y-o-y to Rs 26.65 lakh crore as on December 31, 2021. Retail loans grew 14.6% y-o-y, while the corporate loan book shrank 0.61%. SBI chairman Dinesh Khara guided for a 9% credit growth in FY22.

“As far as the corporate side is concerned, I would like to mention that there is a definite improvement in terms of the utilisation of limits,” Khara said, adding that the unutilised portion in working capital loans has come down to about 43% from 52% in September 2021. In term loans, the undisbursed portion has fallen to about 22% from 23% in December 2020. “This is a clear sign of the better utilisation of sanctioned limits,” Khara said.

SBI is currently sitting on unutilised sanctions worth Rs 2.06 trillion for working capital and Rs 1.99 trillion in term loans, and has seen a growth of Rs 50,000 crore in advances during January. “I am quite confident that going forward we will have a decent growth in corporate credit and I do not envisage any challenge on this,” Khara said.

Deposits grew 8.8% y-o-y to Rs 38.48 lakh crore as on December 31, with the current account savings account (CASA) ratio up 59 bps y-o-y to 45.74%. In the December quarter, slippages fell 44% sequentially to Rs 2,334 crore. The ratio of gross non-performing assets (NPAs) in the retail segment was 4.18%. The bank reported an NPA ratio of 14.42% in its agri loan book and 7.01% in its small and medium enterprises (SME) book.

Khara said SBI has been able to reverse some of the stress that emerged on its books in Q1 during the second wave of Covid. “While the elevated level of slippages in the first quarter of the year was due to exceptional circumstances, we have been able to pull back a significant portion of those slippages. This indicates that our long-term strategy of maintaining asset quality through quality credit underwriting using analytics for early warning signals and focus on collections have started delivering consistent results,” he said.

The bank’s overall asset quality improved, with the gross NPA ratio falling 40 bps sequentially to 4.5% and the net NPA ratio down 18 bps at 1.34%. The share of advances restructured under Covid resolution schemes in the loan book stood at 1.2%, or Rs 32,895 crore. Of this, restructuring has been implemented in loans worth Rs 19,900 crore under the resolution plan 2.0, with loans worth Rs 2,583 crore being recast during Q3.

Khara said the bank has created sufficient contingency provisions against the restructured book to insulate its balance sheet against future shocks arising out of uncertainties. SBI made additional provisions of Rs 1,700 crore during the quarter as a prudent measure.

from Banking & Finance – The Financial Express https://ift.tt/FS1CbB9