SBI’s profit jumps over 50% in Q2 — India’s largest bank plans to outperform the industry when it comes to credit growth

• India’s largest lender, the State Bank of India (SBI), has logged a net profit of over 50% in the second quarter between July to September.
• In the coming months, it plans to outperform the industry when it comes to credit growth, with retail nearly at pre-COVID levels, according to SBI.
• Disbursements have increased across home loans, auto loans and personal loans.
  

India’s largest bank, the State Bank of India (SBI), has logged a net profit of 51.88% on an annual basis. Around ₹1,529.73 crore of the profit came from SBI’s stake sale in its subsidiary SBI Life Insurance. Its Net Interest Income (NIM) grew at 14.56% in the second quarter compared to one year ago.

Not only did SBI perform well in the second quarter, but it has high expectations for the second half of the current fiscal as well. The bank claims that its asset quality is better than what it had estimated and plans to give out more credit in the coming months.

“In the current credit cycle we expect to outperform the industry,” said the bank in a statement. So far, retail has performed better than other segments for the bank. Disbursements have increased across home loans, auto loans and personal loans.

Most companies within its portfolio are also returning to pre-COVID levels, according to the bank. “Their activity levels are 70% to 80% of pre-COVID levels. Our assessment ratio suggests that activity is close to 90% of pre-pandemic levels,” the bank said in its filing with the exchanges.

Bad loans and restructuring
In light of the Reserve Bank of India’s (RBI) mandate and the coronavirus pandemic, the bank also set aside an additional provision of ₹239 crore for COVID related accounts to bring its grand total up to ₹3,247 crore. As a result, the SBI’s provision coverage ratio at the end of September stood at 88.19%.

Source: Company filings (Performa numbers indicate GNPA and NNPA sans the Supreme Court’s order to not recognise any accounts at NPAs after August 31)

As a public sector bank, SBI has also had to set aside money for the revision of employee wages, which has been pending since 2017. The bank has made a provision of ₹2,214 for it during the second quarter. Cumulative provisions for wage revision now stand at ₹12,490.41 crore, pending industry level settlement of the issue.