State Bank of India on Friday posted a four-time jump in its fourth-quarter standalone net profit, thanks largely to a lower loan loss provision burden and a one-time gain.

SBI’s Q4 FY20 profit rose to ₹3,581 crore, against ₹838 crore in the year-ago quarter. This was primarily due to a one-time gain of ₹2,731 crore on the sale of a portion of its investment in subsidiary SBI Cards & Payment Services Ltd. Also, there was a substantial easing of loan loss provision burden at ₹11,894 crore (₹17,336 crore in Q4 FY19).

Dip in net interest income

Operating profit (before provisions and contingencies) declined 7 per cent to ₹15,734 crore (₹16,933 crore). Net interest income (difference between interest earned and interest expended) dipped a marginal 0.81 per cent to ₹22,767 crore (₹22,954 crore).

However, non-interest income (including fee income, profit on sale of investments, forex income and miscellaneous income) was up 27 per cent at ₹16,077 crore (₹12,685 crore).

Fresh slippages in the reporting quarter halved to ₹8,105 crore (₹16,525 crore). As of March-end 2020, gross NPAs declined to 6.15 per cent of gross advances (7.53 per cent).  Net NPAs declined to 2.23 per cent of net advances (3.01 per cent).

Covid-19 impact

SBI Chairman Rajnish Kumar said the bank is well placed to deal with the challenges of Covid-19 in FY21, as it has a diversified loan portfolio and has built up a provision coverage ratio of 83.62 per cent as of March-end 2020 (78.73 per cent).

He emphasised that SBI does not intend to either tap the capital market or approach the government for funds as its pre-provision operating profit will take care of fresh slippages and related credit costs, and provisions towards legacy assets.

The SBI chief said the‘meter’ for banks for recognising slippages in accounts that were offered moratorium (from March 1 to August 31, 2020) will start from September 2020. Even in a bad scenario, the slippages may not be more than 2 per cent, he added.

SBI’s retail borrowers with an exposure aggregating to ₹6,250 crore opted for the Covid-19 regulatory moratorium on repayments.

Kumar said the bank has treated the aforementioned accounts as fresh slippages and made a provision of ₹1,188 crore (includes sub-standard provision of 15 per cent of the loan outstanding and ₹250 crore towards interest reversal).

Though the bank offered a moratorium to all borrowers, 82 per cent of the retail borrowers paid two or more instalments and 92 per cent paid one or more instalment. Within the corporate borrower category, 13 per cent did not pay instalment and the amount involved is very insignificant, he added.

SBI is expecting a loan growth of 7-8 per cent in FY21 against the earlier projection of 12 per cent. Total advances increased by 5.64 per cent year-on-year to ₹24.23-lakh crore as of March-end 2020. Total deposits were up 11.34 per cent year-on-year at ₹32.42-lakh crore as of March-end 2020.

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