State Bank of India (SBI) on Friday reported a 41% year-on-year increase in its fourth quarter net profit of Rs 9,113.53 crore, as improving asset quality has helped lenders reduce provisions. The increase in core income also supported the bank’s quarterly performance.
Net interest income (NII), or the difference between earned and expended interest, increased by 15% year on year to Rs 31,198 crore. Net interest margin (NIM) has improved marginally from 3.12% to 3.11% in Q3FY22.
As on March 31, 2022, the bank’s total growth increased by 11% yoy to Rs 28.19 trillion. Retail debt grew 15% year-on-year, while domestic corporate debt grew 6.35%. SBI chairman Dinesh Khara said the bank has started seeing traction in the corporate debt segment since the third quarter. “In the future, we will see much better use of power in terms of working capital. Working capital utilization has risen to about 56%, up from 50% earlier, ”said Khara.
According to Khara, changes in interest rate cycles are less likely to affect loan demand. “As long as there is demand in the economy, there will be investment,” he said. “The way things are evolving this year, I think it’s going to be a scenario where there will be demand for all the infrastructure needs.”
SBI still has an unused portion of about Rs 4.6 trillion as working capital and term loans. In the term loan category, the unused portion stands at 19-20%. Combined with the unused working capital limit and term loans, the pipeline loan proposals are Rs 4.6 trillion, Khara said.
As of March 31, deposits had grown at a slower rate of 10% yoy than loans at Rs 40.52 trillion, with the current Account Savings Account (CASA) ratio down 85 bps to 45.28% year-on-year.
Provisions fell 34.5% yoy to Rs 7,237 crore in the March quarter, while slips stood at Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s Gross Non-Performing Assets (NPA) ratio fell by 53 bps to 3.97% and net NPA ratio decreased by 32 bps to 1.02%.
The bank reported an NPA ratio of 13.33% in its agricultural credit book and 6.55% in its Small and Medium Enterprises (SME) book. Management has attributed the high NPA ratio in macroeconomic books to macroeconomic factors, especially rural misery.
Shares of SBI ended 3.76% lower at Rs 445.05 on the BSE on Friday.