The country’s largest lender, State Bank of India, saw its net profit fall by 6.93 per cent to Rs 5,196 crore in the December quarter of financial year 2020-21 (Q3FY21) from Rs 5,583 crore in the corresponding quarter last year. The dip was a result of a surge in interest income in Q3FY20 because of a one-time recovery in Essar Steel account of Rs 4,039 crore.
Its asset quality profile improved even if one accounts for the impact when the Supreme Court vacates the interim stay on recognising non-performing assets (NPAs). The pro-forma gross NPAs were 5.44 per cent in Q3, compared with 5.88 per cent in Q2, and 6.94 per cent a year ago. Net NPAs were 1.82 per cent in Q3, against 2.08 per cent in Q2, and 2.65 a year ago.
Spurred by this performance, the SBI stock rose 5.73 per cent to close the session at Rs 355.1 apiece on the BSE.
Net interest income (NII) rose by 3.75 per cent in Q3 to Rs 28,820 crore, from Rs 27,779 crore a year ago. However, if we discount the one-time interest income of Rs 4,039 crore and other income of Rs 452 crore in Q3FY20, NII grew 21 per cent in Q3FY21. Non-interest income grew by 1.54 per cent to Rs 9,246 crore in Q3FY21. Net interest margin (NIM) for domestic operations in Q3FY21 declined to 3.34 per cent from 3.59 per cent a year ago.
Advances grew 6.73 per cent to Rs 24.56 trillion at the end of Q3, of which retail personal advances grew by 15.5 per cent. The share of retail (persons and households) was 39.08 per cent in domestic loan portfolio and the bank is hopeful of raising this to 45 per cent in a year.
“In the retail portfolio, the asset quality is holding up mainly because of the customers we are lending to. Apart from the fact that we are lending to salaried segment, the age composition, the income composition, and the average ticket size of what we have been lending has helped us maintain the asset quality,” said CS Setty, managing director of SBI.
SBI Chairman Dinesh Kumar Khara said, “We have maintained that credit growth would be around 7 per cent for FY21. And, from Q2FY22, we should be in a position to see double-digit credit growth”.
The bank’s express credit has grown more than 35 per cent and at least for the next four quarters, the bank expects to grow this segment at the current pace. Through YONO, its digital banking platform, it has underwritten around Rs 5,300 crore of loans in Q3 and Rs 5,100 crore in Q2.
However, Khara said, even now, corporate loans are subdued, and that it will take more time before there is capital expenditure from the private sector. However, we will continue to see growth coming from public sector entities as far as capital expenditure is concerned, Khara said.
“I am confident that with the kind of outlay that has been announced, it will go a long way in terms building more and more demand and capacity. To start with, we will get to see better limit utilisation and in due course we will see more and more term loan requests coming in,” Khara added.
Provisions and contingencies rose to Rs 10,342 crore in Q3, from Rs 7,252 crore in the year-ago period. As of December end, the bank is holding Covid provisions of Rs 12,976 crore. The provision coverage ratio (PCR), taking into account pro-forma slippages, was 86.33 per cent in December 2020, up from 81.73 per cent in December 2019. Total slippages were Rs 41,000 crore till December 2020. Khara said slippages will be contained within earlier guidance of Rs 60,000 crore in FY21.
When it comes to restructuring, the bank has received applications for Rs 18,125 crore of loans. Of this, Rs 3,900 crore is from the retail personal segment, Rs 2,500 crore from the SME segment, and Rs 11,000 crore from corporate.
The capital adequacy ratio (CAR) was 14.50 per cent with tier-I of 11.73 per cent at end of December 2020.