SBI books highest-ever quarterly profit of Rs 16,884 cr; sees robust loan demand

The nation's largest lender State Bank of India (SBI) on Friday reported its highest-ever quarterly profit at Rs 16,884 crore in the April-June quarter of 2023-24 -- a nearly three-fold jump over Rs 6,068 crore in the year-ago period -- buoyed by a steep fall in bad loans and higher interest income.

On a consolidated basis, the bank's net income soared more than two-fold to Rs 18,537 crore in the quarter from Rs 7,325 crore a year ago. Total income was Rs 1,32,333 crore in the period as against Rs 94,524 crore in the April-June quarter of 2022-23.

On a sequential basis, some of the key numbers such as margins and net interest income showed marginal deterioration while loan loss provisions more than doubled, leading to SBI shares tanking nearly 3 per cent on bourses. This had an upset chairman Dinesh Khare opening his earnings address, wondering aloud why the markets and analysts look only at sequential numbers.

"For a bank, the first quarter is unique as most institutions hold back pay-outs or pay-ins to the last quarter of the fiscal year. In our case in the Q4 of FY23, we had Rs 830 crore of interest income from a tax refund plus there are various other one-off gains, while in the first quarter has none of them at all.

"So a fair comparison is and should be annualised and not sequential; for other quarters I wouldn't mind a sequential comparison,” the chairman told reporters at his headquarters here.

The bank counter, which has the highest market value among all the nearly three dozen central enterprises, closed 2.94 per cent down at Rs 573.25 on the BSE after hitting a low of Rs 571.50 intra-day with a market cap of Rs 5.27 lakh crore.

In the March 2023 quarter (Q4FY23), the bank had booked Rs 16,695 crore of net income, which on a sequential basis is only 1.14 per cent growth in the reporting quarter.

The bank's total income rose to Rs 1,08,039 crore in the first quarter as against Rs 74,989 crore. Of this, interest income printed in at Rs 95,975 crore, 32.06 per cent more than the year-ago period, and the key net interest income clipped at 24.71 per cent to Rs 38,905 crore, Khare said.

The bank continued to improve the asset quality with a major improvement in the slippage ratio too which printed in at 0.94, up by 44 bps on-year and 53 bps quarter-on-quarter, or just about Rs 7,300 crore, down from Rs 9,300 crore a year ago. More importantly, almost all of this came in from agri, SME and retail book and just Rs 131 crore came in from large corporate books, Khare said.

Accordingly, the gross non-performing assets (NPA) fell to 2.76 per cent or Rs 91,328 crore, down from 3.91 per cent or Rs 1,13,272 crore a year ago and from Rs 90,928 crore in Q4FY23.

Net NPAs also eased to 0.71 per cent or at Rs 22,995 crore against 1 per cent a year ago at Rs 28,258 crore and Rs 21,467 crore in Q4FY23.

This had the bank improving its credit cost by 29 bps to 0.32 per cent and Khare said the bank has a target of bringing it down to under 0.25 per cent by the end of the fiscal.

Better asset quality had the bank making only Rs 2,652 crore in loan loss provisions which is as much as 37.87 per cent less than it had provided for in the year-ago quarter at Rs 4,268 crore, but 107.43 per cent higher than the March quarter when it was only Rs 1,278 crore. This had the bank's provision coverage ratio at 74.82 improved by 127 bps and stands at 91.41.

On the margin front, the bank said its domestic NIM (net interest margin) rose 24 bps to 3.47 per cent and the chairman expects this to be maintained at the same level or even marginally more, saying some more assets are to be repriced even as he does not expect the repo rate to go up now.

The bank's credit growth stood at 13.90 per cent but domestic advances grew 15.08 per cent to Rs 33,03,731 crore. Khare said the overall advance growth was impacted by lower growth in foreign advances that grew only 7.44 percent to around Rs 4.6 lakh crore.

Domestic advances growth driven by SME advances, which was 18.27 per cent, followed by retail and personal advances which grew by 16.46 per cent. Auto loans crossed the Rs 1 lakh crore mark during the quarter.

Agri and corporate loans grew 14.84 per cent and 12.38 per cent, respectively.

Of the total advances, domestic corporate rose 12.38 per cent to Rs 9,82,184 crore, domestic retail including personal loan rose 16.46 per cent to 12,04,279 crore of which home loans grew 13.47 per cent to Rs 6,52,548 crore.

On the deposit front, overall deposits grew 12 per cent to 45,31,237 crore and they expect to clip at 12.14 per cent through the year, Of the total deposits the low-cost Casa deposit grew 5.57 per cent to Rs 18,66,059 crore and the ratio stands at 42.88. Term deposits jumped 16.60 per cent to Rs 24,86,168 crore.

The capital adequacy ratio improved by 113 bps to 14.56.

Khare said as much as 63 per cent of SB accounts and 35 per cent of retail asset accounts were acquired digitally through Yono and the share of alternate channels in total transactions increased from 97 per cent on-year to 97.5 per cent.

During the quarter, the bank infused Rs 489.67 crore into its non-life insurance arm SBI General Insurance, and Khare ruled out reviving the now-shelved IPO plan for the company. It also infused Rs 82.16 crore into eight regional rural banks.