Sbi Q4 profit: SBI profit surges to record on loan growth, cut in provisions

Mumbai: (SBI) posted a 41% rise in net profit to a record ₹9,114 crore in the March quarter, led by growth in both retail as well as corporate loans and a 35% drop in provisions. The figure was lower than the ₹10,183 crore estimated by a Bloomberg poll but was still the highest-ever quarterly profit for the public sector bank.

Loans to individuals rose 15% year on year led by a 11.49% growth in home loans. Retail loans crossed the ₹10 lakh crore mark for the bank during the quarter. Retail loans now make up the largest chunk of the ₹28.18-lakh-crore loan book at 23%.

Chairman Dinesh Kumar Khara said the bank is also seeing a pickup in corporate loans with momentum expected to continue because of large unused credit approvals.

“We have about ₹4 lakh crore of working capital loans unused and about 20% of our term loan facilities (is) also not utilised,” he said. “We have started a new segment of factoring services, which have also seen growth during the quarter.”

The bank’s foreign office advances grew 15% due to a 16% growth in loans to Indian companies abroad and a 15% growth in trade finance, even as it saw a fall in external commercial borrowings (ECBs). The bank started factoring services in markets like the US and the UK to support Indian exporters in those markets. Overall growth in corporate advances was just 6%, lower than the 11% growth in total advances.

Khara said the bank is on track to achieve its targeted 15% return on equity (RoE) by fiscal 2024 after a 398 basis point jump year on year to 13.92% at the end of March. One basis point is 0.01 percentage point.

A fall in provisions also helped the bank improve its financials. Total provisions fell 35% to ₹7,237 crore in the quarter ended March from ₹11,051 crore a year ago. Asset quality improved as net nonperforming assets (NPAs) dropped to 1.02% from 1.50% a year ago.

Khara said that the bank does not expect any shocks on asset quality with even post-Covid restructured loans doing well.

“Our total restructured book stands at ₹30,960 crore, which is about 1.1% of our loan book. Our balance sheet is fully insulated from any stress,” he said. The bank’s provision coverage ratio improved to 75% from 71% a year ago.

SBI’s operating performance was below street estimates but a healthy loan book growth and sustained improvement in asset quality have been positive surprises, said Binod Modi, portfolio manager, PMS, at Sharekhan, a BNP Paribas-owned brokerage.

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