SBI Q2 net profit vaults 52% to Rs4,574 cr on lower provisioning

State Bank of India (SBI), the country’s largest lender, reported a 52 per cent year-on-year jump in its fiscal second quarter net profit at Rs4,574 crore on the back of a 49 per cent fall in provisioning for the quarter to Rs5,619 crore. SBI had reported a net profit of Rs 3,012 crore in July-September 2019-20 quarter.

SBI also said its net profit was boosted by higher core income and a fall in bad loans during the quarter.
“Our assessment indicates upward movement in all categories of the economy. Our borrowers are telling us that business is coming back to pre-Covid levels. Collection efficiency has improved to 97.5% for us,” Dinesh Kumar Khara, who took over as chairman of the bank last month, told reporters.
SI said its net interest income, or the difference between interest earned and interest expended, rose 14.55 per cent year-on-year to Rs28,181 crore while the bank’s total income rose 3.4 per cent over the year earlier to Rs75,342 crore.
Despite the lockdown conditions, SBI said its credit outflow grew 6.02 per cent YoY and net interest margin grew 3.34 per cent during the quarter.
SBI also saw its deposits grow 14.41 per cent YoY, with current account deposit rising by 8.55 per cent and saving bank deposits by 16.28 per cent during the quarter.
SBI’s asset quality, too, improved during the quarter. Gross non-performing assets ratio fell 16 basis points quarter-on-quarter to 5.28 per cent. Net NPA, too, improved by 27 basis points over the preceding three months to 1.59 per cent.
SBI got some relief in asset classification with the Supreme Court’s instructions in the Gajendra Sharma v/s Union of India case where the judiciary had asked banks not to classify any accounts as NPA after 31 August. Without this, SBI’s gross and net NPA ratios would have been at 5.88 per cent and 2.08 per cent, respectively.
In the July-September quarter, the bank reported slippages worth Rs2,756 crore compared with Rs8,805 crore a year ago, even as it disclosed that without the SC directive loans worth Rs14,388 crore would have slipped to NPA.
“We are expecting further Rs20,000 crore worth of slippages in the second half of this financial year. This has been calculated keeping in mind our usual run rate of Rs 10,000 crore worth of slippages every quarter. We do not think we will deviate from this,” said Khara.
The bank expects further Rs13,000 crore worth of loans to come up for restructuring before Dec. 31, when the deadline for invoking the scheme ends. Most of these requests are likely to come from the corporate and MSME books, Khara said.
SBI, according to Khara, received restructuring requests for loans worth Rs6,495 crore in the second quarter under the RBI’s one-time restructuring scheme for Covid-affected loans. This included about Rs4,000 crore corporate loans, Rs1,300 crore retail loans and Rs1,100 crore loans from the medium, small and micro enterprises.
SBI’s global advances rose 6 per cent year-on-year to Rs23.83 lakh crore, but were marginally lower  sequentially, according to an analyst presentation.
Domestic advances were up 6.89% year-on-year to Rs20.61 lakh crore. Retail advances rose 14.55 per cent year-on-year to Rs7.85 lakh crore
SBI continues to see traction in its home, auto and unsecured lending business. While unsecured personal loans have seen a 6 per cent% year-on-year rise in disbursements, the bank is not overtly concerned about asset quality. “About 95% of our retail unsecured personal loan borrowers are from the defence sector or are Government of India employees. We will not see high default rates in this segment,” Khara said.
The bank’s investment book also rose 35 per cent year-on-year to Rs13.29 lakh crore. “During the quarter, we have seen some sanctions in the corporate book, but they have not availed the credit yet. Corporates may want to tap the debt market right now to fund their needs. We will be there to serve the customers, wherever they want to raise money from,” Khara said.
SBI’s total deposits rose 14.4% year-on-year to Rs 34.7 lakh crore. Low cost current account, savings accounts deposits rose 15 per cent to Rs15.27 lakh crore, while term deposits grew 14 per cent. CASA ratio as of 30 September stood at 45.39 per cent compared with 45.13 per cent a year ago.