Mumbai
State Bank of India reported a 7 per cent decline in the first quarter of FY23 standalone net profit at ₹6,068 crore on mark-to-market (MTM) losses on the investment book arising from hardening of bond yields even as its balance-sheet size crossed the ₹50-lakh crore mark.
The country’s largest bank had reported anet profit of ₹6,504 crore in the year ago period (Q1FY22).
Net profit in the reporting quarter was down 33 per cent compared with the preceding quarter’s (Q4FY22) ₹9,114 crore.
In the reporting quarter, the Net Interest Income (the difference between interest earned and expended) was up 13 per cent y-o-y at ₹31,196 crore (₹27,638 crore).
Non-interest income — comprising fee based income, trading income, recovery in written-off accounts, and others — declined about 80 per cent to ₹2,412 crore (₹11,803 crore), mainly on account of the MTM impact.
MTM impact
“We saw a hit on account of MTM losses amounting ₹6,549 crore on our investment book. The MTM hit also had an adverse impact on the bank’s RoA (return on assets) and RoE (return on equity), which were down 9 basis points and 203 basis points, respectively. We do not see any actual loss in this (investment) book. And as yields soften, we will recover most of these MTM losses,” said Dinesh Kumar Khara, Chairman. As at June-end, the RoA and the RoE stood at 0.48 per cent (0.57 per cent as at June-end 2021) and 10.1 per cent (12.2 per cent), respectively.
Fresh slippages jumped to ₹9,740 crore in the reporting quarter against ₹2,845 crore in the preceding quarter. Khara said the bank has already pulled back almost ₹2,800 crore out of the first quarter’s slippages.
Gross non-performing assets (NPAs) declined to 3.91 per cent of gross advances as at June-end 2022 against 3.97 per cent as at March-end 2022. Net NPAs declined to 1 per cent of net NPAs against 1.02 per cent.
Asset quality
Provisions for non-performing assets (NPAs) declined 15 per cent y-o-y to ₹4,268 crore (₹5,030 crore). The bank wrote-back standard asset provisions amounting to ₹1,295 crore (it had made a provision of ₹1,578 crore in the year-ago period). Investment depreciation provision was higher at ₹1,503 crore (₹517 crore).
SBI chief Khara underscored that the consistently improving asset quality is reflected in the credit cost, which stood at 61 bps for the quarter against 79 bps in the year ago quarter.
As at June-end 2022, the special mention account (accounts showing signs of incipient stress) portfolio increased to ₹6,983 crore from ₹3,544 crore as at March-end 2022.
Gross advances were up 14.93 per cent y-o-y at ₹29,00,636 crore. Retail personal advances notched up 18.58 per cent y-o-y growth, followed by corporate (10.57 per cent), SME (10.01 per cent), agriculture (9.82 per cent) and foreign office advances (22.39 per cent).