The State Bank of India (SBI) on November 4 registered a significant surge of 51.9 percent to Rs 4,574 crores Year-on-Year growth in standalone profit for the September quarter as compared to Rs 3,012 crores in the previous year which significantly beat the expectations of the analyst. The surge was driven by lower provisions, tax cost and higher net interest revenue.
Net interest income which amounts to the difference between interest earned and interest expended, rallied 14.6 percent in the year-on-year growth to Rs 28,181.5 crore in Q2FY21 with credit growth resting at 6.02 percent in Y-o-Y growth and net interest margin resting at 3.34 percent for the quarter.
The total deposits surged up by 14.41 percent Y-o-Y, with the current account deposits rallying by 8.55 percent Y-o-Y and saving bank deposits surging up by 16.28 percent Y-o-Y, the bank stated.
“Bank has delivered a strong performance in Q2FY21 with all-round improvement in profitability, capital adequacy and provision coverage ratio, including additional provision over minimum regulatory provisions required,” said SBI.
On the asset quality front, the bank stated that the gross non-performing assets(GNPA) as a percentage of gross advances, declined by a total of 16 basis points sequentially to 5.28 percent and the net NPA fell by 27 basis points Q-o-Q to 1.59 percent in the quarter that ended September 2020.
Keeping in mind the Supreme Court order issued on September 3, 2020, the bank has yet not declared any domestic loan account following the NPA which was standard as of August 31, 2020.
“But the gross NPA and net NPA would have been at 5.88 percent and 2.08 percent respectively for the quarter, if the bank had classified the loan accounts as NPA after August 2020, in accordance with the Income Recognition and Asset Classification (IRAC) norms of the RBI,” SBI said.
The fresh slippages dropped to Rs 2,756 crore in September quarter as compared to Rs 3,637 crore reported in June quarter, while the gross slippages declined to Rs 3,085 crore in September quarter, against the Rs 3,910 crore that was registered in the previous quarter.
Benefits and contingencies for the September quarter stood at Rs 10,118 crore and declined by 23 percent as compared to the year-ago period and the consequential fall was around 19.1 percent in Q2FY21.
Provision coverage ratio surged to 88.19 percent in the September quarter from being at 86.3 percent in the June quarter. “The provision coverage ratio would be 85.25 percent if the bank had followed the IRAC norms,” SBI said in its BSE filing.
State Bank of India has decided additional benefits of Rs 239 crore on COVID related accounts in the second quarter, taking the total COVID -19 related benefits to a total of Rs 3,247 crore.
The pre-provision operating profit in the September quarter increased by 11.9 percent to Rs 16,459.76 crore as compared to the subsequent time in the previous year. The pre-provision operating profit in Q2FY20 was boosted by the stake sales at the SBI Life Insurance Company.
Non-interest income fell by 0.1 percent in year-on-year to Rs 8,527.69 crore during the second quarter, while tax expenses reduced by 13.7 percent Y-o-Y to Rs 1,767.3 crore in September quarter 2020.
The worries over NPA, delay in stressed accounts resolution and loan growth slowdown continued to levy pressure on the banking sector, especially the Public Sector Unit banks.
As a result, the stock price has not seen any major surge in the ongoing financial year so far, as it was around Rs 200 currently as against the closing price of Rs 196.85 on March 31 earlier this year, while it gained only 4 percent during the September quarter. Subsequently, the stock price corrected by 1.25 percent to Rs 202.20 on the BSE at 2:03 IST.
