Money & Banking

SBI profits zooms 41% to ₹5,583 crore in Q3

Our Bureau Mumbai | Updated on January 31, 2020 Published on January 31, 2020

Currently, the RBI has named three banks — SBI (in picture), ICICI Bank and HDFC Bank — as DSIBs. File Photo   -  BusinessLine

 

 

State Bank of India, on Friday, reported a robust 41 per cent jump in net profit at ₹5,583 crore in the third quarter ended December 31, 2019, along with an improvement in asset quality. The bank said this is the highest-ever quarterly net profit recorded by it.

India’s largest bank had clocked a net profit of ₹3,955 crore in the year-ago quarter. SBI’s bottomline in the reporting quarter was supported by a healthy rise in net interest income and a steep decline in provisioning requirement towards bad loans.

 

During the quarter, the bank exercised the option of lower tax rate, taking a one-time hit of ₹1,333 crore. Excluding the impact of this one-time additional hit, the bank, in a statement, said net profit in third quarter would have been ₹6,916 crore.

Net interest income (difference between interest earned and interest expended) was up 22 per cent year-on-year (y-o-y) at ₹27,779 crore (₹22,691 crore) in the year-ago period. Other income (including fee income, profit on sale of investments, forex income and recovery in written-off accounts) increased by 13 per cent to ₹9,106 crore (₹8,035 crore in the year-ago period).

Rise in slippages

Slippages, which jumped to ₹16,525 crore during the reporting quarter (₹8,805 crore in the preceding quarter), includes exposure to a large housing finance company (about ₹7,000 crore), the bank said in a statement.

Loan-loss provisioning requirement declined 41 per cent to ₹8,193 crore against ₹13,971 crore in the year-ago quarter. However, provision towards investment depreciation rose to ₹3,287 crore against a write-back of ₹7,994 crore in the year-ago quarter.

In the case of the troubled DHFL, SBI made a 20 per cent provision towards its loan exposure (of about ₹7,000 crore). It also has a ₹2,900-crore exposure by way of investment in the financial instruments issued by this housing finance company. The bank has made 50 per cent provisioning towards investment depreciation on these instruments.

Rajnish Kumar, Chairman, SBI, said: “It has been a very strong operating performance for SBI in terms of profit, profitability parameters, asset quality, provision coverage ratio and capital adequacy.

“In terms of business performance, there was a strong growth in deposits and a very strong growth in retail advances, which covers all our personal loans, housing loans, agriculture and small and medium enterprise (SME) advances.”

Corporate loans

Referring to the not-so-good growth in corporate loans, Kumar said this would be the only discordant note in the performance of the bank in the reporting quarter.

He emphasised that that the bank had a very good recovery as far as Essar Steel is concerned, but there was a set back on account of slippage of the housing finance company account.

Asset quality improves

Gross non-performing assets’ (GNPA) position improved to 6.94 per cent of gross advances in the reporting quarter against 7.19 per cent in the preceding quarter. Net NPAs declined to 2.65 per cent of net advances in the reporting quarter against 2.79 per cent in the preceding quarter.

GNPAs (taking into account recovery and upgradation, and fresh slippages and increase in outstanding) declined by ₹1,975 crore during the reporting quarter to stand at ₹1,59,661 crore as of December-end 2019.

Credit growth at 6.79 per cent y-o-y (to ₹23,01,669 crore) was mainly driven by retail-personal advances, which grew by 17.49 per cent y-o-y. Deposits grew 9.92 per cent y-o-y to ₹31,11,229 crore.

Kumar said the bank has a strong sanctions pipeline (predominantly towards project loans for renewable energy, roads, and oil and gas) of ₹1.14-lakh crore.

On Friday, the shares of SBI closed at ₹318.55 apiece, up 2.53 per cent over the previous close on the BSE.

Published on January 31, 2020
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