SBI Q3 net profit jumps 62% to Rs 8,432 cr, asset quality improves

Lender posts highest quarterly profit in Q3FY22, sees improvement in interest margins

Country’s largest lender, State Bank of India (SBI), reported a 62.3 per cent year-on-year (YoY) rise in net profit at Rs 8,432 crore in the third quarter ended December 31, 2021 on increase in interest margins.

This is the highest quarterly net profit reported by the bank.

In the year-ago period (Q3FY21), it had posted a net profit of Rs 5,196 crore. Sequentially, profits rose by 10.56 per cent from Rs 7,627 crore in Q2FY22.  

Net interest Income (NII) of the lender rose by 6.48 per cent YoY in Q3FY22 to Rs 30,687 crore from Rs 28,820 crore the same period last year on back of improvement in credit offtake. Sequentially, it was down 1.6 per cent from Rs 31,184 crore, SBI said in a statement.

Domestic net interest margin, a measure of profitability, stood at 3.40 per cent in Q3FY22, up six basis points YoY. However, sequentially NIM declined by 10 basis points from 3.50 per cent in Q2FY22.

Other income -- fees, sale of investments, recoveries and forex income --- fell to Rs 8,673.42 crore in Q3FY22 from Rs 9,246.15 crore a year ago.

The loan loss provisions rose by 35.18 per cent YoY to Rs 3,096 crore in Q3FY22 from Rs 2,290 crore in Q3FY22 and 14.7 per cent from Rs 2,699 crore in Q2FY21.

Asset quality improved in the third quarter with gross non-performing assets (NPAs) declining at 4.5 per cent in December 2021 from 4.77 per cent a year ago and 4.9 per cent in the September quarter. 

Net NPAs were higher at 1.34 per cent in December 2021 as against 1.23 per cent in December 2020. However, they were down from 1.52 per cent in September 2021. 

The bank restructured loans worth Rs 2,583 crore under the One Time Restructuring window in the reporting quarter. The total restructuring book stood at Rs 32,895 crore at end of December 2021 (Q3FY22).

Pointing to stability in the recast portfolio, SBI chairman Dinesh Khara said the restructured book is showing reasonably decent behaviour. Bank has created sufficient contingency provisions against the restructured loan portfolio to insulate balance sheet from future shocks arising out of uncertainties in this book, he said.

Asked about exposure to the retail chain (Future Retail), which became a bad loan, he said the bank has made more than adequate provisions for it.   

The bank’s advances grew by 8.47 per cent YoY to Rs 26.64 trillion. Personal retail advances rose 14.57 per cent YoY and foreign office advances grew by 21.35 per cent YoY. 

As for the rise in unsecured credit in retail, he said the bank is careful in selecting borrowers. Most of them are those who are drawing salaries from governments and armed forces. So there is no cause for concern.  

Home loan, which constitutes 24% of bank’s domestic advances, grew by 11.15 per cent YoY. Growth in corporate and SME segments has also picked up during the quarter, Khara said.

Besides infrastructure, mining sector is also looking for loans to fund the capital expenditure. The use of working capital limits in Q3, which is the beginning of the busy season, has improved. In January 2022, the bank gave credit worth Rs 15,000 core. It has a pipeline of over Rs 4 trillion crore, he said. 

Its total deposits grew at 8.83 per cent YoY to Rs 38.47 trillion as end of December 2021. 

The bank's capital adequacy ratio stood at 13.23 per cent in December 2021 down from 14.5 per cent in December 2020. 

Expected internal accruals will be adequate to meet business growth, chairman said. 

Its return on equity (RoA) rose to 14.01 per cent in December 2021 from 9.49 per cent a year ago.