State Bank of India on Friday reported a four-fold rise in profits for the quarter ended March 31. However, the country’s largest lender warned that loan growth may be slow this year, due to the COVID-19 crisis.
“We had budgeted for a 12 per cent growth in our loan book. But, that seems unlikely in the current scenario. But, it should be higher than what we have done in FY20. I believe, we should be somewhere between 5 per cent to 12 per cent. So, midpoint somewhere 7-8 per cent,” Rajnish Kumar chairman of SBI said during a conference call.
In the fourth quarter, SBI reported a four-fold rise in net profit at Rs 3,581 crore, compared with a profit of Rs 838 crore, a year ago. The jump in profit was aided by an improving asset quality and one-time gain during the quarter.
The lender had exceptional gains of Rs 2,731 crore in the January-March quarter, on account of the stake sale in SBI Cards, which went public in March.
The stellar profit growth aside, SBI’s net interest income declined 0.8 per cent to Rs 22,767 crore, compared with Rs 22,954 crore in the year ago quarter. Its net interest margins stood at 2.94 per cent, versus 3.02 per cent.
“In not so easy circumstances even before COVID-19, during the year 2019-20, the bank has declared a record profit of Rs 14,848 crore; it is highest ever profit for SBI in its history. Consistently, quarter after quarter, we have been improving our asset quality, as well as the provision coverage ratio,” said Kumar.
Its gross non-performing assets (GNPA) improved to 6.15 per cent in the March quarter, versus 7.53 per cent, a year ago, and 6.94 per cent in December. Net NPAs also declined to 2.23 per cent from 3.01 per cent in March 2019 and 2.65 per cent in the third quarter. Despite, the quarter-on-quarter improvement in NPAs, its provisions for NPAs still increased to Rs 11,893 crore in March, from Rs 8,193 crore in December.
The lender continues to see a strong growth in deposits. Last quarter, its total deposits grew more than 11 per cent to Rs 32.41 lakh crore. However, gross advances were up just 5.6 per cent to Rs 24.22 lakh crore. While, corporate loan growth actually fell 0.9 per cent, retail loan growth stood at 15.40 per cent.
Soon after the union government had announced a nationwide lockdown from March 25, the Reserve Bank of India announced a three months moratorium on loan repayments. This moratorium on monthly EMIs (equated monthly installments) was extended till August 31 by the central bank last month.
State Bank of India had extended the moratorium to all its borrowers. Yet, 82 per cent of the borrowers have paid two or more installments and 92 per cent of the people had paid at least one installment during the period, pointed Kumar.
He is hopeful that despite the impact COVID-19 is going to have on the wider economy and businesses, slippages (fresh accretion of bad loans) may not rise more than 2 per cent. Last quarter, the bank’s slippage ratio was at 1.41 per cent.
Investors gave a big thumps up to SBI’s earnings and the forward looking commentary on Friday, with the stock closing 7.9 per cent higher at Rs 187.80. The benchmark BSE Sensex rose 306 points or 0.9 per cent to 34,287.24 points.
