State Bank of India reported 74 per cent year-on-year increase in net profit at ₹13,265 crore for quarter ended September. This marks the highest ever quarterly net profit posted by the bank.

The bank’s net interest income rose by 13 per cent to ₹35,183 crore, while its operating profit expanded to ₹21,120 crore, up 17 per cent year-on-year. Robust growth in advances at ₹30,35,071 crore, up 20 per cent year-on-year boosted the bank’s financials in the September quarter.

Loan growth

Terming it one of the busiest quarters the bank has witnessed lately, Dinesh Khara, Chairman, SBI, said he expects the loan growth in FY23 to be around 14–16 per cent. This is a significant increase from the earlier estimates of 10–12 per cent.

Also, for the first time in many quarters, the bank saw its corporate advances grow faster than its retail book (including agri-loans and loans to small and medium enterprises) at 21 per cent year-on-year to ₹9,17,016 crore. Growth in the retail loan book at ₹10,74,853 crore came at 19 per cent year-on-year.

Demand for corporate loans came from infrastructure sector, oil and marketing companies and services sector mainly NBFCs. About ₹1.27-lakh crore worth of corporate loans are pending for disbursement and has a pipeline of ₹2.41-lakh crore.

The bank’s retail loan demand was largely led by Xpress credit, auto loans and gold loans, while the home loan book — which recently crossed the ₹6-lakh crore mark — rose by 15 per cent year-on-year during the quarter. Deposits during the quarter stood at ₹41,90,255 crore, up 10 per cent year-on-year, while the share of low-cost CASA deposits fell to 45 per cent in Q2, as against 46 per cent a year-ago.

SBI’s non-interest income also grew by 8 per cent year-on-year to Rs 8,874 crore. In June quarter the bank posted a loss on this front mainly due to treasury losses and decided to tweak recognition methodology on treasury instruments. This has helped the bank in Q2.

Improvement in key ratios

The bank’s gross non-performing assets (NPA) at 4 per cent or ₹1,06,804 crore and net NPA at 0.8 per cent or ₹23,572 crore was at decadal best levels. Slippages or accounts which turned bad during the quarter at ₹2,399 crore almost halved from year-ago level, while credit cost eased to 0.28 per cent in Q2. Provisioning cost during the quarter was ₹2,011 crore, down 25 per cent year-on-year. An improvement in asset quality and robust loan growth took bank’s return on assets and return on equity to a 20-year best levels of 0.76 per cent and 16 per cent, respectively. The bank’s capital adequacy ratio stood at 14 per cent and its common tier-1 capital was 10 per cent in Q2.