SBI profit soars 212% to ₹3011 cr in Sep quarter
Q2 PROFIT SBI’S consolidated net rises six-fold on better asset quality, margins
MUMBAI: A massive improvement in asset quality and gains from stake sale in a subsidiary have helped State Bank of India (SBI) on Friday report a near six-fold growth in consolidated net at ₹3,375 crore for the three months to September period.
On a standalone basis, net income of the nation’s largest lender that controls over a fifth of the system-wide credit and deposits, soared 212% to ₹3,011 crore.
However, amidst a slowing economy, very few corporate are drawing down on sanctioned working capital limits, capping the loan growth to under-9%, forcing SBI to focus more on retail advances, which clipped at 19% and now constitute 60% of the book, chairman Rajnish Kumar told reporters in a conference call, adding once things turn around, the share of corporate loan book will grow.
On asset quality, gross nonperforming assets dipped to 7.19% of the ₹22.48-lakh crore loan book, from 9.95% a year ago, which was also boosted by a halving of fresh slippages to ₹8,000 crore.
Kumar said loan waivers have caused slippages to swell to ₹16,000 crore earlier, and termed ₹8,000 crore as the normal number, and also exuded confidence of keeping gross slippages under 2%. “...we have reached a situation where our gross slippages, even in not-so-good circumstances, are not likely to exceed 2%,” he said.
SBI booked a ₹3,500-crore profit from a stake sale in SBI Life, which was fully used to provide for two potential cases of stress that the bank is staring at,
SBI BOOKED A ₹3,500 CR PROFIT FROM A STAKE SALE IN SBI LIFE, WHICH WAS USED TO PROVIDE FOR TWO POTENTIAL CASES OF STRESS
Kumar said, adding they have also aside ₹2,600 crore for a power account where restructuring has failed, while ₹900 crore will be utilized for a potential loss towards an exposure to a mortgage lender currently in stress.
Overall provisions for bad assets inched up to ₹11,040 crore from ₹10,184 crore, helping the bottomline.
Kumar said SBI has a ₹7,000crore exposure to DHFL, (which he did not name though) and expects the account to slip into
NPA in Q3. The bank has already set aside 20% of its exposure as provision.
About the difficulties banks are facing due to their exposure to DHFL, including banks and mutual funds to reach an agreement on resolution, Kumar said SBI can has the capability to deal with any eventuality.
On the warnings of banks’ exposure to NBFCS resulting in system-wide difficulties ahead, Kumar said many a time, the threats are “overstated” and that SBI has not faced issues on this segment barring one account.
Kumar said the bank has already classified its ₹1,200 crore exposure to a power project as an NPA, but will have commit another ₹2,600 crore to the same account to honour a letter of credit, but the bank has already made full provision this upcoming drawdown.
Kumar said a part of the ₹16,822 crore stressed accounts, which are standard now, will slip into NPAS in the next two quarters, but stressed that the slippages will be within the ₹32,000-crore range.
From an upcoming stress perspective, accounts over due for 30-89 days have come down to ₹9,312 crore from ₹10,289 crore in the June quarter.
The provision coverage ratio now stands at 81.23%, which is a 10 percentage points improvement over the year, and Kumar said this along with a strong capital base of 13.59% places the bank in good shape for the future. The bank has written off ₹12,000 crore of loans during the reporting quarter, down from ₹16,000 crore in Q1, and as against ₹58,000 crore in FY19, Kumar said.