SBI posts record quarterly profit of Rs 9,114 cr, misses Street estimates

State Bank of India (SBI), the country’s largest lender, on Friday reported its highest-ever quarterly net profit of Rs 9,114 crore for the January-March quarter (Q4FY22), rising 41.28 per cent compared with the same period last year.

The bank’s profit growth was mainly due to improvement in its net interest margins and a sharp decline in loan loss provisions. The net profit, however, missed analyst estimates of Rs 10,183 crore, according to Bloomberg. The bank also reported its highest-ever yearly net profit of Rs 31,676 crore in FY22, which was up 55 per cent from FY21.

The board of directors recommended a dividend of Rs 7.1 per equity share (710 per cent) for 2021-22. The SBI stock closed 3.8 per cent lower at Rs 445 per share on the BSE.

The lender’s net interest income (NII) expanded by 15.26 per cent to Rs 31,198 crore in Q4FY22 from Rs 27,067 crore in Q4FY21.

The net interest margin (NIM) for domestic operations improved to 3.4 per cent for Q4FY22 from 3.11 per cent in Q4FY21.

Dinesh Kumar Khara, chairman, SBI, said the upward revision in lending rates following the policy repo rate hike would be positive for the bank. “Loans get repriced immediately while interest rates on deposits change with a lag, resulting in better margins,” Khara said during the post-earnings interaction with the media.

The bank’s non-interest income declined by 26.77 per cent year on year (YoY) to Rs 11,880 crore in Q4FY22.

Advances increased by 11 per cent to Rs 28.18 trillion at the end of March 2022. Domestic retail loans expanded by 15.11 per cent YoY to Rs 10.02 trillion. The domestic corporate credit rose by 6.35 per cent to Rs 8.70 trillion.

The SBI chairman indicated the bank was seeing revival in corporate credit demand.

“From the third quarter onwards, we have started seeing traction in the corporate loan segment,” Khara said. “Going forward, we are seeing much better capacity utilisation in terms of working capital. The working capital utilisation has improved almost to 56 per cent, which was 50 per cent earlier. We still have an unutilised portion of around Rs 4.6 lakh crore both in terms of working capital and terms loans. In term loans, our unutilised portion is 19-20 per cent now,” Khara said.

While Khara declined to give an estimate for credit growth in FY23, he said the bank aimed to do better than the 11 per cent rate clocked in FY22. He said credit growth was likely to outpace deposit growth in FY23.

The bank saw deposits grow by 10.06 per cent YoY to Rs 40.51 trillion in March 2022. The share of low-cost deposits – Current Account and Savings Account (CASA) – declined to 45.28 per cent as of March 31, 2022, from 46.13 per cent in March 2021.

The asset quality profile improved with gross non-performing assets (NPAs) declining to 3.97 per cent as of March 31, 2022, from 4.98 per cent in March 2021. Its net NPA declined to 1.02 per cent in March 2022, down from 1.5 per cent a year ago.

The loan loss provisions fell sharply by 67.10 per cent to Rs 3,262 crore in Q4FY22 from Rs 9,914 crore in Q4FY21. However, the provision coverage ratio (PCR) improved to 90.2 per cent in March 2022 from 87.75 per cent a year ago.

Khara said the bank has made full provision for exposure to finance services group (SREI) and retail chain (Future group) but declined to specify how much was total exposure.

“The bank has been able to deliver reasonably good outcome in business, profitability and asset quality parameters. We have also created sufficient contingency provisions against restructured book to insulate our balance sheet from any future shocks,” Khara said.

C S Setty, managing director (retail and digital banking), said the restructured book, including retail and MSME loan, was about Rs 30,000 crore. The retail book was behaving well but some stress in MSMEs was evident. The bank carries 30 per cent provision on restructured loans as against 15 per cent regulatory requirements.