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SBI results: Strong quarter aided by lower provisions and higher Net Interest Income

SBI results: Strong quarter aided by lower provisions and higher Net Interest Income

Last updated: 03 Nov, 2021 | 03:44 pm

SBI Results: SBI Quarterly Results for Q2 (2021-22) Date, Earnings & Review

Profit beats estimates: India’s largest bank State Bank of India (SBI) has reported a 67% jump in net profit to Rs 7,626.5 crore in Q2FY22, beating street expectations. Analysts had earlier anticipated a profit of about Rs 7,546 crore. The higher bottomline was aided by higher core income and lower provisions. 

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 11% on year to Rs 31,184 crore. The net interest margin (NIM) for the bank during the September quarter rose 16 basis points to 3.50%.

Asset Quality Improves - SBI reported gross Non-Performing Asset ratio at 4.9% in the second quarter of FY22. In Q1FY22, the gross NPA reported was 5.32%. Even net NPA declined by 25 basis points sequentially to 1.52%. 

SBI reported gross slippages of Rs 4,292 crore. Last year, in the same quarter, it was Rs 3,085 crore, and in the first quarter of FY22, it was Rs 16,298 crore. It reported recoveries and upgrades worth Rs 7,407 crore in Q2FY22 compared with Rs 4,969 crore in the previous quarter. Provisions against bab loans for Q2FY22 stood at Rs 2,699 crore, down 52% over a year ago.

Deposits - Deposits grew 9.77% year-on-year at Rs 38 lakh crore. Total advances rose 6.7% YoY to Rs 25.3 lakh crore. Retail loans increased 15.17% from a year earlier and stood at Rs 9.04 lakh crore. Corporate advances stood at Rs 7.56 lakh crore, down 4% YoY. Term deposits increased by 8% and stood at Rs 19.38 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 11.75% to Rs 17.06 lakh compared to last year's same period. 

Other highlights - SBI's Capital Adequacy Ratio (CAR) at the end of Q2FY22 came in at 13.35% even without including the first-half profit. Credit Cost for the second quarter declined 51 basis points to 0.43% when compared with last year. Cost to income ratio during the quarter stood at 54.10% and it is lower by 106 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 Jul-Sep 21 period, beating street estimates. The bank has seen a healthy rise in its Net Interest Income, and a significant drop in provisions. Notably, SBI has taken a one-time loss of Rs 7,418.4 crore due to revision in the family pension payable to employees covered under the 11th bi-partite settlement. Despite this, the bank has reported a healthy financial performance. 

SBI’s asset quality has also improved during the quarter. net NPA declined by 25 basis points sequentially to 1.52%. The has also been a good rise in the bank Net Interest Margin. Provision Coverage Ratio (PCR) is one of the best in the industry at 88 per cent. The bank has been strengthening its processes to follow-up with customers to avoid defaults. SBI has guided for a 10% credit growth by the end of this fiscal. While corporate growth had been a challenge for the bank, there are early signs of revival. This should further aid the bank’s performance in the upcoming quarters.