Lender reports increase in net interest income, decline in bad loans; slippages rise in agri, SME loans
State Bank of India (SBI) on Wednesday reported second-quarter net profit jumped 52% to ₹4,574 crore as net interest income rose and the lender cut its provision for bad loans.
Operating profit (excluding exceptional items) rose 12% to ₹16,460 crore, from ₹14,714 crore a year earlier, as the economy showed signs of revival. Net interest income grew by 14.6% and domestic net interest margin improved by 12 basis points (bps) to 3.34%, the country’s largest bank said in a regulatory filing.
Loan loss provisions stood at ₹5,619 crore, 49.1% lower than the ₹11,041 crore in the year-earlier quarter.
Total deposits grew 14.4%. Credit growth in the quarter stood at 6.02% as gross advances increased to ₹23,83,624 crore at the end of the second quarter, from ₹22,48,313 crore a year earlier. The growth was mainly driven by retail (personal) advances (14.6%), agricultural loans (4.19%) and corporate credit (2.82%). The loan book grew by 7.97%.
Home loans increase
Home loans, which constitute 23% of the bank’s domestic advances, grew by 10.3%. Net NPA ratio at 1.59% eased 120 bps from a year earlier, while the gross NPA ratio slid 191 bps to 5.28%.
SBI Chairman Dinesh Kumar Khara said slippages rose in agriculture and SME loans, while in the case of corporate, there was a marked decline. Corporate slippages dropped to ₹1,232 crore during the quarter, from ₹8,593 crore in the same period last year. Slippages in agriculture loans increased to ₹9,513 crore, from ₹7,370 crore.
Mr. Khara said while 35,000 MSMEs had applied for loan restructuring, only 42 corporates (none of them large) had together applied for loan restructuring worth ₹4,000 crore.
Provision coverage ratio improved 696 bps to 88.19%. Slippages ratio declined to 0.46%, from 1.57% as of September 2019.
COVID-19 related provisioning during the quarter was ₹4,083 crore, SBI said.
Capital Adequacy Ratio (CAR) improved by 113 bps to 14.72%, the bank said.
Credit growth rebounds
“Credit growth in retail is coming back to pre-COVID-19 levels. Sanctions and disbursements during Q2FY21 are significantly higher year-on-year across most retail products,” Mr. Khara said. “Asset quality outcomes are better than prior expectations. Collection efficiency in domestic loan book [excluding agri segment] as at the end of Q2FY21 stands at 97%,” he added.
“There is sufficient liquidity [credit deposit ratio at a low of 61.3%] to fund credit growth which is on the mend,” the chairman said.