SBI Q2 net up 52%, chief says retail will be growth lever

Mumbai: State Bank of India’s (SBI) second-quarter profit Wednesday surged about 50 per cent in the latest evidence that unshackling of the broader economy is quickly restoring its health, with earnings from the core lending operations at the country’s biggest mass lender climbing about a sixth through the stage-gated unlocking.

Net profit at the Mumbai-based lender was Rs 4,574 crore in the September quarter, compared with Rs 3,012 crore in the same period of the previous year. Its net interest income — the difference between interest earned and paid — was up 15 per cent to Rs 28,181 crore. The lender said activities in several segments had returned to pre-Covid levels, suggesting normalisation. Provisions and tax costs declined, while net interest income climbed in the period under review.

“Our assessment indicates an upward trend in economic activities; most companies are suggesting that activities are touching 70-80 per cent of the pre-Covid levels,” said Dinesh Khara, chairman, SBI. “Vehicle and tractor sales are robust, and GST collections have returned to February levels, showing that the economy is picking up.”

The bank recorded advances growth of 6 per cent, with retail loans registering growth of 15 per cent, followed by agriculture at 4 per cent. Corporate loans recorded tepid growth of 3 per cent. The bank is targeting advances growth of 8-9 per cent for the full fiscal year. Collection efficiency was healthy, at 98 per cent.

“Retail will be our major lever for growth going forward; home loan sanctions are up 29 per cent, and auto loans 29 per cent,” Khara said. “On the corporate side, while we do see some sanctions but we are yet to see them avail the loans. I think it is partly because of lack of demand. Hopefully, we will see growth in the coming quarters in the corporate book.”

The bank reported gross non-performing loan ratio at 5.28 per cent at the end of September versus 7.19 per cent a year ago. Its net non-performing loan ratio was at 1.59 per cent versus 2.79 per cent a year ago. Without factoring in the Supreme Court verdict on a temporary pause in asset classification, the GNPA and NNPA would have been 5.88 per cent and 2.08 per cent, respectively.
The bank reported total slippages of Rs 6,393 crore in the first half of the current financial year. It also declared additional proforma slippages of Rs 14,388 crore for which it made provisions of Rs 3,194 crore. SBI is estimating total slippages of nearly Rs 20,000 crore for the next two quarters and expects credit costs to remain below 2 per cent.
“Fresh slippages are more in the agri sector and also the SME sector; corporate slippages have come down significantly,” the chairman said. “Of the total slippages of Rs 14,388 crore (sans SC order), we have already pulled back Rs 6,000 crore until the end of October.”

Provisions and contingencies for the quarter at Rs 10,118 crore declined 23 per cent. The bank said it held a total Covid provision of Rs 7091 crore at the end of September.