India’s top lender SBI posts record Q4 profit
STATE Bank of India (SBI), the country’s largest lender, on Thursday (May 18) reported a more than 83 per cent jump in fourth-quarter profit, led by a sharp drop in provisions on bad loans and healthy credit growth.
Net profit was at a record 166.95 billion rupees (S$2.7 billion) for the quarter ended Mar 31, compared with 91.14 billion rupees a year earlier, the lender said in an exchange filing. That was sharply higher than analysts’ expectations of 151.99 billion rupees, as per Refinitiv IBES data.
Provisions and contingencies more than halved to 33.16 billion rupees amid an improvement in asset quality.
The lender’s gross non-performing assets (NPA) ratio – a key metric of asset quality – fell to 2.78 per cent from 3.14 per cent in the previous quarter and 3.97 per cent a year ago. The net NPA ratio improved to 0.67 per cent from 0.77 per cent in the prior three months.
Lenders have cleaned up their balance sheets over the past few years following better credit growth, bad loan recoveries and write-offs.
SBI’s net interest income, the difference between interest earned and paid, jumped 29.5 per cent from a year earlier to 403.93 billion rupees. Net interest margin, a key indicator of a bank’s profitability, rose to 3.84 per cent from 3.40 per cent.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The bank’s gross loans increased by nearly 16 per cent, while deposits climbed 9.2 per cent, largely led by term deposits.
Indian banks have been reporting double-digit credit growth in recent months, even as the Reserve Bank of India (RBI) raised interest rate by 250 basis points since last May. Meanwhile, the growth in deposits has lagged behind loans.
SBI is “quite hopeful” of seeing credit growth in the 12 per cent to 14 per cent range this fiscal year, chairman Dinesh Kumar Khara said in a virtual post-earnings news conference.
The state-run lender’s corporate loan sanctions amounted to 1.75 trillion rupees, while total loan sanctions were 3.5 trillion rupees, Khara said, adding that sectors such as renewables, infrastructure, ports and aviation are seeing good credit demand.
Going forward, deposits will not be a limiting factor to expand the bank’s loan book, he said. The lender also plans to seek board approval to raise funds via bonds, he added.
SBI’s shares closed down 2.1 per cent at 574.15 rupees after logging their worst intra-day percentage drop since Mar 20 earlier in the session. The shares have risen nearly 10 per cent since Apr 1, when the earnings season began.
They have fallen 6.4 per cent so far this year, compared to a 2.2 per cent rise in the Nifty Bank Index. REUTERS
Share with us your feedback on BT's products and services
