SBI's standalone profit grows by 55 percent annually
State Bank of India reported its highest quarterly profit of Rs 6,504 crore as loan-loss provisioning saw a 46.6 percent annual decline.
India's largest bank State Bank of India (SBI) reported its highest quarterly standalone profit of Rs 6,504 crore in the first quarter of financial year (FY) 2022.
The standalone profit grew 0.83 percent sequentially in a period marked by partial lockdowns to counter the second wave of the COVID-19 pandemic. It was also 55.3 percent higher on a year-on-year basis.
SBI’s total standalone income rose 3.9 percent over the same period in FY 2021 to Rs 77,367.2 crore, but fell by 4.8 percent on a sequential basis compared to Rs 81,326.96 crore in the quarter ended March 2021.
The higher total income was aided by a 48.32 percent rise in SBI's other income, reported at Rs 11,802.74 crore compared to Rs 7,957.48 crore a year ago. However, compared to Rs 16,225.32 crore in the March 2021 quarter, the latest quarter saw a sequential fall of over 27.25 percent.
“The spread of COVID-19 pandemic across the globe has resulted in decline in economic activities and movement in financial markets. ln this situation, (the) Bank is gearing up itself on all fronts to meet the challenges,” SBI said in an exchange filing.
SBI added that the situation continues to be uncertain, and it is evaluating the situation on an ongoing basis. "Major challenges for the Bank could be from extended working capital cycles, fluctuating cash flow trends and probable inability of the borrowers to meet their obligations against the loans on time," it said.
In the latest quarter, SBI's loan-loss provisioning of Rs 5,029.79 crore declined by 49.3 percent, compared to Rs 9,914.23 crore in the quarter ended March 2021. The annual decline in provisioning was 46.6 percent from Rs 9,420.46 crore in June last year.
The lender’s net interest income, which is the gap between the interest it earns and expends, rose 3.74 percent over last year and 2.1 percent sequentially to Rs 27,638 crore. The net interest margin, which reflects its growth, was 3.15 percent during the quarter, falling 9 basis points from last year in the domestic market. This reflects the bank's profitability relative to the size of its assets.
On the non-performing assets (NPAs) front, SBI's gross-NPAs increased over 6.22 percent sequentially from Rs 1.26 lakh-crore in March 2021 to Rs 1.34 lakh-crore in June 2021. On an annual basis, the increase was 3.54 percent from more than Rs 1.29 lakh-crore in June last year.
As a percentage of total advances, SBI's gross-NPA ratio stood at 5.44 percent in June last year, before improving to 4.98 percent and then inching up to 5.32 percent.
At net-NPA level, from Rs 42,703.63 crore (1.86 percent of advances) in June last year, there was a 1.05 percent increase to Rs 43,152.52 crore (1.77 percent of advances) in June 2021.
On a sequential basis, the net-NPAs have increased by a sharp 17.2 percent from Rs 36,809.72 crore (1.5 percent of advances) in March 2021 quarter.
In terms of the asset mix, retail loans grew by 16.5 percent and drove the domestic credit growth of 5.64 percent comapred to last year.
The retail banking segment, which accounted for 42 percent of SBI revenue in FY 2021, saw a 5.7 percent sequential decline in the first quarter of FY 2022 to Rs 31,886.8 crore. The segment suffered a loss of Rs 1,383.7 crore, compared to a profit of Rs 1,413.1 crore in the March 2021 quarter.
SBI's revenue from corporate banking segment fell 18.9 percent sequentially to Rs 19,279.5 crore, while the income from treasury operations rose 15 percent sequentially to Rs 26,091.7 crore. Further, the operating profit from treasury operations at Rs 7,077.3 crore was 123 percent higher than the Rs 3,172.34 crore in the March 2021 quarter.
SBI also reported that its thrust on digital banking has been yielding favorable results, as digital channels accounted for 75 percent of the transactions in June 2021, up from 62 percent in June last year.
Interestingly, 38 percent of SBI's retail asset accounts and 72 percent of savings accounts were opened in the June 2021 quarter over its YONO (You Only Need One) platform, which saw around 2.4 million registrations in the quarter, taking the cumulative registrations to aornd 39.53 million.
Also, the number of internet-banking users have seen an annual growth of over 19.68 percent, at 91.2 million in the June 2021 quarter compared to 76.2 million in the same period last year.
SBI's mobile banking users have also grown by 16.1 percent in a year, from 17.4 million in June 2020 to 20.2 million in the latest quarter. SBI accounts for 23.67 percent of mobile-banking transaction volumes in India, and 22.64 percent of the mobile banking transactions in terms of value.
Its efforts to deploy analytics and artificial intelligence (AI) are helping it offer personalised products. Its AI-based early warning signals for loan stress also helps the bank with early interventions for all type of loans.
Edited by Rajiv Bhuva