SBI profit up 81% in June quarter to Rs 4,189 cr, moratorium down at 9.5%

State Bank of India (SBI) has reported a 36.8 cent rise in profit before tax (PBT) to Rs 5,560 crore in the June 2020 quarter (Q1FY21), compared to Rs 4,063 crore in the year-ago quarter.
 
A one-time gain of Rs 1,540 crore from the stake sale in its life insurance subsidiary and robust interest income were the key factors for the rise in profits Q1FY21. Net profit surged 81.1 per cent to Rs 4,189 crore from Rs 2,312 crore last year.
 
Net interest income (NII) grew 16.1 per cent year-on-year (YoY) to Rs 26,642 crore, from Rs 22,939 crore in Q1FY20. However, other income (comprising fees, commissions, etc) fell to Rs 7,957 crore from Rs 8,015 crore in Q1FY20.
 
“The situation remains uncertain and the bank is evaluating it continuously. Major challenges will arise from an extended working capital cycle and waning cash flows. Yet, there won’t be a significant impact on liquidity and profitability,” said the lender.
 

 
SBI has earmarked an additional provision of Rs 1,836 crore owing to the ongoing crisis, taking the Covid provisioning to Rs 3,000 crore at the end of Q1. Further, 9.5 per cent of the term loan book is under moratorium, against 23 per cent in Q4FY20.
 

“Two or more instalments have been serviced for 91 per cent of the book, while either none or only one instalment was paid for the remaining 9.5 per cent. About 3.3 per cent were to the private sector, with 2 per cent being AA, AAA rated ones,” said Chairman Rajnish Kumar. He added that no extension to the moratorium was needed.
 
“I have made my views very clear that after August 31, moratorium is not required,” said Kumar. Asset quality improved in Q1. Gross non-performing assets (GNPAs) declined to 5.44 per cent from 7.53 per cent in Q1FY20 and 6.15 per cent in Q4FY20. Net NPAs declined to 1.86 per cent from 3.07 per cent last June. Net NPAs stood at 2.23 per cent in March 2020.
 
“If there is prolonged recession and recovery takes time, corporate slippages may rise. But the book is very different compared to what happened in FY18,” said Kumar. “The SME segment has alleviated some NPAs and a lot of help is coming from the government. SMEs and the lower end of mid-corporates is where the number is very large, as of June 30.”
 
Recoveries were muted because of the economic downturn but the bank expects a swift rise. “It was around Rs 440 crore, but throughout the year we expect it to rise significantly. We are looking at recovering Rs 10,000-11,000 crore from corporates in the next two quarters, besides normal recoveries,” said Kumar.
 
The banks’ deposit base grew 15.96 per cent YoY, of which current account deposit grew 12.98 per cent and savings bank deposits grew 17.29 per cent. Credit growth, meanwhile, stood at 6.58 per cent — driven mainly by retail (personal) advances and foreign office advances.