State Bank of India (SBI), the largest lender in India, on November 4 registered a significant 51.9 percent year-on-year growth in standalone profit for September quarter, driven by lower provisions and tax cost, and higher net interest income.
Standalone profit increased to Rs 4,574 crore during the quarter, compared to Rs 3,012 crore in the year-ago period, beating analysts' expectations.
Net interest income - the difference between interest earned and interest expended - climbed 14.6 percent year-on-year to Rs 28,181.5 crore in Q2FY21 with credit growth at 6.02 percent YoY and net interest margin at 3.34 percent for the quarter.
The deposits grew by 14.41 percent YoY, with current account deposit
rising by 8.55 percent YoY and saving bank deposits up by 16.28 percent YoY, said the bank.
Numbers were ahead of CNBC-TV18 poll estimates which were pegged at Rs 3,682.3 crore for profit and Rs 27,014 crore for net interest income.
"Bank has delivered a strong performance in Q2FY21 with all round improvement in profitability, capital adequacy and provision coverage ratio, including additional provision over minimum regulatory provisions required," said SBI.
On the asset quality front, the bank said gross non-performing assets as a percentage of gross advances declined 16 bps sequentially to 5.28 percent and net NPA fell 27 bps QoQ to 1.59 percent in the quarter ended September 2020.
Following the Supreme Court order dated September 3, 2020, the bank has not declared any domestic loan account as NPA which was standard as of August 31, 2020.
But the gross NPA and net NPA would have been at 5.88 percent and 2.08 percent respectively for the quarter, if the bank had classified the loan accounts as NPA after August 2020, in accordance with the Income Recognition and Asset Classification (IRAC) norms of the RBI, SBI said.
The fresh slippages dropped to Rs 2,756 crore in September quarter, compared to Rs 3,637 crore reported in June quarter, while gross slippages, too, declined to Rs 3,085 crore in September quarter, against Rs 3,910 crore registered in previous quarter.
Provisions and contingencies for the quarter at Rs 10,118 crore declined 23 percent compared to year-ago period and the sequential fall was 19.1 percent in Q2FY21.
Provision coverage ratio improved further to 88.19 percent as of September 2020, from 86.3 percent in June quarter. "The provision coverage ratio would be 85.25 percent, if the bank had followed the IRAC norms," SBI said in its BSE filing.
State Bank of India has made additional provisions of Rs 239 crore on COVID related accounts in Q2, taking the total COVID related provision at Rs 3,247 crore.
The pre-provision operating profit in Q2 increased 11.9 percent to Rs 16,459.76 crore compared to previous year. The pre-provision operating profit in Q2FY20 was boosted by the stake sale in SBI Life Insurance Company.
Non-interest income fell 0.1 percent year-on-year to Rs 8,527.69 crore during the quarter, while tax expenses reduced 13.7 percent YoY to Rs 1,767.3 crore in the quarter ended September 2020.
Earlier this month, the government appointed Dinesh Kumar Khara (currently Managing Director) as the Chairman of State Bank of India for a period of three years.
The worries over NPA, delay in stressed accounts resolution and loan growth slowdown continued to weigh on the banking sector, especially PSU banks.
As a result, the stock price has not seen any major movement in the current financial year, so far, as it was around Rs 200-levels now against the closing of Rs 196.85 on March 31 this year, while it gained just 4 percent during the September quarter.
The stock price corrected 1.25 percent to Rs 202.20 on the BSE at 14:03 hours IST.
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