SBI Q3 results: Profit soars 62% on-year, asset quality improves

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Profit beats estimates: India’s largest bank State Bank of India (SBI) has reported a 62% jump in net profit to Rs 8,432 crore in Q3FY22, above street expectations. Analysts had earlier anticipated a profit of about Rs 8,259 crore. The higher bottomline was aided by lower provisions. In the September quarter, SBI reported a net profit of Rs 7,626.5 crore.

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income (NII) for the bank rose 6.5% on year to Rs 30,687 crore. The net interest margin (NIM) for the bank during the December quarter rose 6 basis points to 3.4%. Other income for the quarter fell 6.2% to Rs 8,673 crore.

Asset Quality Improves: SBI reported gross Non-Performing Asset ratio at 4.5% in the third quarter of FY22, down by 40 basis points. In Q2FY22, the gross NPA reported was 4.9%. Even net NPA declined by 18 basis points sequentially to 1.34%. 

SBI reported gross slippages of Rs 2,334 crore. Last year, in the same quarter, it was Rs 237 crore. On a sequential basis though, slippages fell 44%. The slippage ratio was at 0.37% against 0.66% in the previous quarter.

Deposits: Deposits grew 8.83% year-on-year at Rs 38.47 lakh crore. Total advances rose 8.5% YoY to Rs 26.64 lakh crore. Retail loans increased 14.57% from a year earlier and stood at Rs 9.52 lakh crore. Corporate advances stood at Rs 7.83 lakh crore, down 0.61% YoY. Term deposits increased by 7.42% and stood at Rs 20.18 lakh crore.

CASA: CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. The current account and savings account deposits increased by 9.98% to Rs 17.01 lakh compared to last year's same period. 

Other highlights: SBI's Capital Adequacy Ratio (CAR) at the end of Q3FY22 came in at 13.23% even without including the first-half profit. Credit Cost for the third quarter increased by 11 basis points to 0.49% when compared with last year. Cost to income ratio during the quarter stood at 52.94% and it is lower by 153 basis points as compared to the same period a year earlier.

SBI results: review

State Bank of India (SBI) has reported a good set of numbers in the Oct-Dec 21 period.. The bank has seen a healthy rise in its Net Interest Income, and a significant drop in provisions. 

SBI’s asset quality has also improved during the quarter. Net NPA declined by 11 basis points sequentially to 1.34%. The has also been a good rise in the bank's Net Interest Margin. Provision Coverage Ratio (PCR) is one of the best in the industry at 88.32%. Growth in the corporate and small businesses segment has also picked up during the quarter. SBI's share price closed 1.97% lower on Friday at Rs 529.45.