SBI Q4 net profit up 122.7% to ₹2,815 cr
KOLKATA/MUMBAI: State Bank of India’s (SBI’s) fiscal fourthquarter net profit more than doubled, beating analysts’ estimates, as asset quality at the nation’s largest lender improved and it set aside less money to cover bad loans.
The rate of fresh bad-loan additions has slowed, but the bank expects provisioning to remain elevated in the current fiscal year as well.
Net profit in the March quarter jumped 122.7% to ₹2,814.8 crore. “Asset quality and loan growth positively surprised,” Siddharth Purohit, an analyst at Angel Broking Pvt. Ltd, told Bloomberg.
Gross bad loans rose 14.4% from a year ago to ₹1.12 lakh crore at the end of March. The bank had reported bad loans of ₹1.08 lakh crore three months earlier. Gross non-performing assets made up 6.9% of SBI’s loan book at the end of March, compared with 7.23% three months ago. The bank had slippages, or fresh additions to bad loans, of ₹9,755 crore in the three months ended March, compared to ₹10,185 crore in the third quarter.
The slippage rate “appears to be slowing”, said Arundhati Bhattacharya, SBI’s chairman. The so-called watchlist of loans being closely monitored by the lender has shrunk to 1.6% of the corporate loan book compared to 2.3% three months earlier, she said. The slower rate of bad loan additions meant SBI had to set aside ₹11,740 crore as provisions, down 10.9% from a year ago.
Bhattacharya said the bank is carrying ₹5,910 crore as excess provision on standard loans— where the lender is anticipating some weakness—and ₹1,149 crore as a counter-cyclical provision buffer (capital reserves that banks need to build in good times; these are used only in times of economic or systemwide downturns). Thus, SBI also had a provision coverage ratio of 65.95%, second only to Bank of Baroda.
Despite these excess provisions, Bhattacharya said there’s going to be a “little more pain in the near term”. She expects credit costs (percentage of provisioning against the total advances) to remain “slightly elevated” in the current year as stressed asset resolution accelerates.