Manojit Saha
5 Aug 2023
Our Effort will be to improve the casa with focus on current accounts. We should try to improve the ratio from the current level
State Bank of India, the country's largest lender, on Friday reported a whopping 178.25 per cent jump in the June quarter profit to Rs. 16,884 crore on the back of a surge in treasury income, healthy loan growth, and lower provisions.
Net interest income - the difference between interest earned and interest expended - grew by 24.71 per cent to Rs. 38,905 crore. Net interest margins from domestic operation swelled 24 basis points year-on-year (YoY) to 3.47 per cent. NIM for the quarter stood at 3.84 per cent due to interest on income from tax refund, which was not there in the April-June period.
Profit on sale of investments were Rs. 3,847 crore during the quarter due to softening of bond yields, as compared to a loss of Rs. 6,549 crore during the same period last year. Total non-interest income was Rs. 12,603 crore against Rs. 2,132 crore in the first quarter of the previous financial year.
"Once again we have recorded the highest-ever profit [quarterly]," SBI Chairman Dinesh Khara said, adding that there was no one off item to benefit from the first quarter, unlike the January - March quarter. "Credit growth was robust in all the segments," he said. Gross advances grew by 13.9 per cent to Rs. 3,300 crore, of which retail loans grew by 16.46 per cent to Rs. 12 trillion. Home loans grew by 13.47 per cent Y-o-Y to Rs. 6.5 trillion.
Corporate advances grew by 12.38 per cent to Rs. 9.82 trillion. Khara said the bank expects 14-16 per cent loan in the current financial year. The SBI chairman said the corporate lending pipeline is Rs. 3.5 trillion, of which Rs. 1.16 trillion is sanctioned but disbursement is pending. Cost of income ratio fell sharply from 61.94 per cent a year ago to 50.37 per cent. Khara said the bank aims to bring down the ratio below 50 per cent.
SBI reported a 12 per cent increase in deposits to Rs. 40.45 trillion. While term deposits grew by 16.6 per cent, savings account and current account (Casa) deposit growth was muted, at 5.57 per cent. The share of Casa deposits to overall deposits were 42.88 per cent, down from 45.33 per cent a year ago. "Our effort will be to improve the Casa with focus on current accounts. We should try to improve the ratio from the current level,"Khara said.
SBI expects deposit growth to be 13-14 per cent for the current financial year. Gross NPA ratio at 2.76 per cent is down by 115 bps YoY, while net NPA ratio at 0.71 per cent is down by 29 bps. Loan loss provision for the quarter declined by 37 per cent to Rs. 2,652 to Rs. 2,652 crore.
Total provision for the quarter was Rs. 8,314 crore as compared to Rs. 6,684 crore in the year - ago period, due to a rise in income tax provision. Provision coverage ratio was at 74.82 per cent as compared to 75.05 per cent a year ago. Fresh slippages during the quarter was Rs. 7,659 crore against Rs. 9,740 crore during the same period of the previous year. Slippages in Q1 were higher as compared to all the previous three quarters. Slippages from agriculture was Rs. 2,300 crore, and from SME portfolio it was Rs. 2,200 crore.
SMA1 & 2 (Special mention accounts), which means payment is overdue but continues to be standard, was Rs. 7,221 crore (loans of over Rs. 5 crore), slightly higher than Rs. 6,983 a year ago. SBI's recovery in July was around Rs. 1,500 crore but indicated there was no high value recovery expected in the current financial year. Recovery and upgradation in April-June quarter was Rs. 4,741 crore.
"Our effort will be to keep the credit cost below 0.5 per cent for the fiscal year. Visibility of stress is a function of the real economy," Khara said.
SBI had a capital adequacy ratio of 14.56 per cent as on June 30 as compared to 12.1 per cent of minimum regulatory capital ratio. Common equity tier-1 (CET1) ratio was at 10.19 per cent, as compared to the regulatory requirement of 8.6 per cent.