 "SBI Q2 results: PAT up 8.03% to Rs 14,330 cr on robust NII growth")
Country’s largest bank State Bank of India’s (SBI's) net profit rose 8.03 per cent on a year-on-year (y-o-y) basis to Rs 14,330 crore in the quarter ended September 2023 (Q2FY24) on healthy net interest income (NII) and a decline in loan loss provisions.
Sequentially, the public sector lender's profits were down by 15.13 per cent from Rs 16,884 crore in the quarter ended June 2023 (Q1FY24).
Operating profits declined to Rs 19,416 crore in Q2FY24 from Rs 21,120 crore in Q2FY23 and Rs 25,296 crore in Q1FY24 mainly due to a higher provision for a proposed wage hike (about 14 per cent) and pension provisions.
Its net interest income (NII) expanded by 12.27 per cent year-on-year to Rs 39,500 crore in Q2FY24 from Rs 35,183 crore in the same quarter a year ago. Sequentially, NII fell by 1.53 per cent from Rs 38,905 crore in Q1FY24.
In post-result media interaction, SBI Chairman Dinesh Khara said the improvement in yields on advances and strong credit offtake supported healthy growth in NII.
Net interest margins (NIMs) for domestic operations moderated by 12 basis points to 3.43 per cent in Q2FY24 from 3.55 per cent in Q2FY23. Sequentially, NIMs fell from 3.47 per cent in Q1FY24.
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The repricing of deposits pushed the cost of funds and impacted the NIMs. “We expect the NIMs to stay at current levels,” Khara said.
The non-interest income rose to Rs 10,890 crore. Sequentially, it fell from Rs 12,063 crore in Q1FY24.
The public sector lender’s provisions for non-performing assets (NPAs) declined by 9.75 per cent from Rs 1,815 crore in Q2FY23 to Rs 2,011 crore in Q2FY24. They also fell sequentially from Rs 2,652 crore in Q1FY24.
Its advances expanded by 12.39 per cent on a year-on-year basis to Rs 34.11 trillion in Q2FY24. Domestic retail loan book expanded by 15.68 per cent year-on-year, and corporate loans by 6.62 per cent. The total loan is expected to grow by 13-14 per cent and retail by 15-16 per cent in FY24. The corporate credit worth Rs 1.5 trillion is awaiting disbursements. The busy season, also known as the second half of FY24, will see a higher level of business activity.
Asked about the stress in the unsecured loan book, SBI Chairman said, “The 86 per cent of unsecured credit is to those who have salary accounts with us. It is a robust loan book and is not a concern for us.” The outstanding unsecured credit stood at Rs 3.03 trillion.
Total deposits increased by 11.91 per cent y-oy to Rs 46.89 trillion. The share of low-cost deposits — current account and savings accounts (Casa) declined to 41.88 per cent at the end of September 2023, from 44.63 per cent a year ago.
On competition from the largest private bank HDFC Bank after the merger with HDFC, he said the bank is alive to such merger events. SBI has an extensive network including branches (over 22,000) and a digital banking platform to manage competition. The bank is working on plans to open 600 more branches in the current and next financial year.
The slippage ratio was up from 0.33 per cent in September 2022 to 0.46 per cent in September 2023. But, sequentially it was down from 0.94 per cent in June 2023.
Its credit cost declined on a year-on-year basis from 0.28 per cent in September 2022 to 0.22 per cent in September 2023. It dipped sequentially from 0.32 per cent in June 2023. The bank has begun to make a higher provision for standard accounts which may face some stress.
The provision coverage ratio (PCR) for non-performing assets (NPAs) improved to 91.93 per cent in September 2023 from 91.54 per cent a year ago.
The asset quality profile improved with gross non-performing assets (NPA) declining to 2.55 per cent in September 2023 from 3.52 per cent in September 2022. They were at 2.76 per cent in June 2023.
The net NPAs also declined to 0.64 per cent in September 2023 from 0.80 per cent a year ago. Sequentially it declined from 0.71 per cent.
The capital adequacy ratio stood at 14.28 per cent with common equity tier I (CET1) at 9.94 per cent at the end of September 2023.
The capital base is adequate to support credit growth of Rs 6.5 trillion. The retained profits for FY24 will increase the Capital Adequacy Ratio beyond 15 per cent, SBI Chairman said.