The country’s largest lender, State Bank of India (SBI), on Friday, reported a 28 per cent year-on-year (y-o-y) and 8 per cent quarter-on-quarter (q-o-q) increase in its net profit for the quarter ended September at ₹18,331 crore, driven by higher other income. The lender’s pre-provisioning operating profit surged 51 per cent y-o-y at ₹29,294 crore.

The bank’s other income, which includes fees from third-party services, treasury income, and recoveries from written-off accounts, among others, increased by 42 per cent y-o-y to ₹15,271 crore. Net interest income (NII) grew at a slower pace of 5 per cent on year at ₹41,620 crore, and net interest margin (NIM) was down 8 basis points (bps) sequentially at 3.14 per cent. The majority of lenders have seen a moderation in NIM in Q2 due to higher cost of deposit.

Deposit rate peaked

However, SBI Chairman CS Setty said that the deposit rate may have peaked at the current levels and he expects NIM to stabilise from hereon. Even if the Reserve Bank of India (RBI) cuts the repo rate going ahead, the bank has increased the marginal cost of funds-based lending rate (MCLR) thrice in recent months and thus does not expect a higher impact on NIM. SBI’s overall deposits increased by 9 per cent y-o-y to ₹51.17 lakh crore, of which low-cost current account and savings accounts (CASA) had a 40 per cent share.

“Guidance holds for double-digit growth. We are endeavouring towards 12-13 per cent (deposit growth) but will probably not be able to reach that by FY25. The effort is to have at least 10-11 per cent deposit growth. The intensity of effort for deposit mobilisation gives me confidence that (deposit growth) will be in double digits if not 12-13 per cent,” the chairman said.

Overall advances of the bank, meanwhile, increased by 15 per cent on year to ₹39.20 lakh crore, and are expected to grow by 14-16 per cent in current fiscal, he added. The lender has ₹6 lakh crore of corporate loans in pipeline.

NPAs improve

SBI’s asset quality improved in the reporting quarter, with both gross and net non-performing asset ratios (GNPA, NNPA) moderating to 2.13 per cent and 0.53 per cent, respectively, compared to 2.21 per cent and 0.57 per cent in the last quarter.

Credit cost moderated 10 basis points (bps) on quarter to 0.38 per cent in Q2, and the slippage ratio declined to 0.51 per cent from 0.84 per cent in the last quarter. The capital adequacy ratio stood at 13.76 per cent in Q2 and the lender’s central board has approved raising ₹20,000 crore via infrastructure bonds in FY25.

Q2FY25 (in ₹ crore)y-o-y change in per cent
Advances39.20 lakh crore15
Deposits51.17 lakh crore9
Net interest income41,6205
Net NPA (in per cent)0.53-11 bps
Net profit18,33128