SBI Q4 Results: Net Profit Rises 81% YoY
Exterior of State Bank of India, Navi Mumbai branch (Photo: BloombergQuint)

SBI Q4 Results: Net Profit Rises 81% YoY

State Bank of India’s quarterly net profit rose on higher interest income and lower provisions.

Net profit of India’s largest lender rose 81% year-on-year to Rs 6,451 crore for the three months ended March, according to an exchange filing. That compares with the Rs 6,166-crore consensus estimate of analysts tracked by Bloomberg.

Its net interest income, or core income, increased 19% over the year earlier to Rs 27,067 crore, against a forecast of Rs 28,853 crore. The bank’s other income, too, rose 21.6% to Rs 16,225 crore.

Asset Quality

SBI’s asset quality improved in the reported period, with its gross non-performing asset ratio at 4.98% as on March 31, 2021 compared with 5.44% as of December. Its net NPA ratio, too, improved 31 basis points sequentially to 1.5%.

  • Slippages during the quarter stood at Rs 21,934 crore, while upgrades and recoveries stood at Rs 4,329 crore.
  • SBI reported retail slippages worth Rs 2,938 crore, agricultural slippages worth Rs 7,246 crore and corporate slippages worth Rs 6,558 crore.

As of March 31, SBI said that it had restructured loans worth Rs 5,316 crore under the Reserve Bank of India’s one-time restructuring scheme for borrowers affected by the Covid-19 pandemic. This included retail loans worth Rs 2,761.64 crore and corporate loans worth Rs 2,554.53 crore. The bank holds provisions worth Rs 1120.75 crore against these loans.

Total bad loan provisions fell to Rs 9,914 crore, down 16.6% year-on-year.

According to Dinesh Khara, chairman, SBI, the bank is expecting asset quality pressures to abate during the current financial year. While the bank is watching for the impact of the second wave of Covid-19 cases, at present collection efficiency is at 96%, even though the bank’s employees have not been able to go out for physical collections of loans, the chairman said while speaking to reporters after the earnings release.

We do not see any major asset quality pressure going ahead. We are closely monitoring retail loan asset quality. We are yet to see any major impact of the second wave. We are hoping that the impact of the second wave will be behind us at the end of this month.
Dinesh Khara, Chairman, SBI

Advances & Deposits

The bank’s total domestic advances rose 5.67% year-on-year to Rs 21.82 lakh crore. Retail advances stood at Rs 8.7 lakh crore, rising 16.47% from a year ago. In comparison, the domestic corporate loan book contracted 3% year-on-year to Rs 21.82 lakh crore. Including investment in corporate securities, the corporate book increased marginally.

The drop in the outstanding corporate loan book was largely because companies are not utilising available credit lines, the bank’s chairman said. Large projects where the bank has already sanctioned credit lines, did not take off due to the pandemic. However, as the situation normalises, these credit lines will get utilised and push up growth for the bank.

“Currently the working capital utilisation is at 70%, which means it is even lower for large corporates. The large corporate borrowers are also able to replace their bank dues by raising funds through the bond market,” Khara said.

In the retail segment, SBI is growing its gold loans portfolio, according to CS Setty managing director. As of March 31, the gold loan book, inclusive of agricultural and personal retail loan borrowers, stood at Rs 90,000 crore. “We see an opportunity to add another Rs 10,000 crore this financial year,” Setty said.

Overall, the bank is aiming for a 10% growth in its outstanding loan book in the current financial year, according to Khara.

Total domestic deposits for SBI rose 14.26% from a year ago to Rs 35.7 lakh crore. Current account, savings account deposits rose 16.73% year-on-year to Rs 16.47 lakh crore. Term deposits rose 12.23% from a year ago to Rs 19.23 lakh crore.

Shares of SBI were trading 1.3% higher after the results were announced, compared with a 1.28% gain in the benchmark Nifty 50.

(Corrects an earlier version that misstated profit growth)

Watch the interview with Dinesh Khara, chairman, SBI, here:

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