State Bank of India (SBI) reported a marginal increase in first quarter (Q1FY25) standalone net profit at ₹17,035 crore despite robust credit growth as loan loss provisions weighed on the bottomline.
In addition to moderate growth in net interest income, the current quarter’s net profit, up 0.89 per cent compared to the year-ago quarter’s ₹16,884 crore, was supported by write-back in other provisions.
Dinesh Kumar Khara, Chairman of India’s largest Bank, observed that credit growth (at 15.39 per cent) continues to be robust across all segments, with the domestic credit-deposit (CD) ratio of 69.28 per cent indicating a significant cushion to grow the credit portfolio.
He emphasised that the bank is very well capitalised (its capital adequacy ratio was at 13.86 per cent as ofJune-end 2024) and can easily support balance sheet growth of ₹6.5-7 lakh crore.
The corporate loan sanctions pipeline is currently at ₹4.62 lakh crore. The bank is seeing good traction in loan demand from mid-corporates.
Net interest income (interest earned less interest expended) was up 6 per cent year-on-year (yoy) at ₹41,125 crore (₹38,905 crore in the year ago quarter).
Other income, including fee income, earnings from foreign exchange and derivative transactions, profit or loss on sale/revaluation of investments, dividend from subsidiaries and recoveries made in written-off accounts, declined about 7.5 per cent yoy to ₹11,162 crore (₹12,063 crore).
The decline in other income was mainly due to the bank adopting the revised framework for classification and valuation of investments, which resulted in a 31 per cent decline in income from investments to ₹2,589 crore (₹3,847 crore).
Slippages rose to ₹7,903 crore in Q1FY25 from ₹3,867 crore in the preceding (Q4FY24) quarter. Khara said that after June 30, the bank was able to recover almost ₹1,600 crore from the slippages.
Special mention accounts, specifically with exposure above ₹5 crore and where principal or interest payment overdue between 31-90 days, increased to ₹4,637 crore against ₹3,301 crore in the preceding quarter. These are accounts that are showing signs of incipient stress.
Loan loss provisions jumped 70 per cent yoy to ₹4,518 crore (₹2,652 crore). The bank received a write-back of ₹1,271 crore from other provisions. In the year-ago quarter, it had made a provision of ₹268 crore under this head.
Total deposits increased 8.17 per cent yoy to ₹49,01,726 crore. Gross advances were up 15.38 per cent yoy to ₹38,12,087 crore.
In this regard, Khara said that while deposit growth lags behind credit growth, the bank’s excess statutory liquidity ratio (SLR) portfolio holding is helping support credit growth.
Besides, the bank is tapping infrastructure bond issuances and certificates of deposit to augment resources to lend.
While cost of deposits for domestic operations has gone up by 45 basis points yoy to 5 per cent and that foreign offices rose 76 bps to 4.30 per cent, the whole-bank NIM came down only by 11 basis points yoy to 3.22 per cent, the SBI chief said.
Remarkable profit growth
State Bank of India’s cumulative net profit in the last four years at ₹1.63 lakh crore is more than what it earned in the last 64 years, said Chairman Dinesh Kumar Khara.
“When I assumed office (in October 2020), our annual profit was ₹40,000 crore. Now, the quarterly profit is ₹17,000 crore.
“Sharp focus in terms of quality of advances.... shoring up of other income. These are some of the factors that helped us,” Khara said in his Swansong quarterly results press meeting.
This is the result of the commitment and dedication of each SBIian, he added.