SBI Q2 net up 52% on lower provisions

State Bank of India’s (SBI) standalone net profit rose 52% year-on-year (y-o-y) to Rs 4,574 crore in Q2FY21 as provisions fell 23% and a judicial stay on bad loan recognition helped contain slippages. The bank expects slippages of Rs 20,000 crore in the second half of FY21 and a maximum of Rs 13,000 crore worth of requests for restructuring till the end of December 2020.

In the September quarter, slippages fell 24% sequentially to Rs 2,756 crore. Much of the slippages came from the agriculture and small and medium enterprises (SME) segments, with the pandemic making it harder to renew crop loans. SBI chairman Dinesh Khara said the lender has already started to see a bounce-back in some of the recently-slipped accounts. Of the Rs 6,000 crore of SME slippages, almost Rs 3,000 crore has been pulled back in October, he said.

Khara added that it was still difficult to gauge the health of small enterprises under the current circumstances. “This year has been very unusual because there is no trend getting established on a month-on-month basis. Much of it is a function of how the demand is and how the enterprise is able to respond to that demand,” Khara said.

SBI’s provisions stood at Rs 10,118 crore, including Rs 7,091 crore worth of Covid-related provisions. The value of loans which continued to be classified as standard on account of the Supreme Court’s interim order stood at Rs 14,388 crore. The bank has provided to the extent of Rs 3,194 crore against these accounts and this amount is part of the overall Covid-19 provisions. SBI’s collection efficiency stood at 97.5%.

So far, SBI has received restructuring requests worth Rs 6,495 crore and it has provided Rs 650 crore against these accounts in Q2. Khara said, “These additional proforma slippages are as on September 30, 2020, and if we account for the pullback which we have seen in October, we have pulled back about Rs 6,000 crore worth of advances.”

SBI’s operating profit fell 9.6% y-o-y to Rs 16,460 crore. Its net interest income rose 14.6% y-o-y to Rs 28,181 crore and its domestic net interest margin rose 10 basis points (bps) sequentially to 3.34%.

The bank’s gross advances grew 6% y-o-y to Rs 23.84 lakh crore as on September 30, 2020. Accounting for the bank’s investments, the growth in assets was around 8%. Retail loans grew 14.55% y-o-y, while corporate loans were up 3%. SBI expects a loan growth of 8-9% for FY21. Deposits grew 14.41% y-o-y to Rs 34.7 lakh crore as on September 30, with the current account savings account (CASA) ratio up 26 bps y-o-y to 45.39%.

There was an improvement on the asset quality front as the gross non-performing asset (NPA) ratio fell 16 bps sequentially to 5.28% and the net NPA ratio slid 27 bps to 1.59%. But for the apex court’s interim order, the gross and net NPA ratios would have been at 5.88% and 2.08%, respectively.

SBI’s shares ended 1.12% higher than their previous close on the BSE at Rs 207.05 on Wednesday.