SBI Q3 Results: Profit Falls 35.4% On One-Time Pension Provisions
Net interest income, or core income, for the lender rose 4.5% year-on-year to Rs 39,815 crore.
State Bank of India's third quarter profit fell 35.4%, missing analysts' estimates.
The public sector lender's standalone net profit stood at Rs 9,163.96 crore for the quarter-ended December, as compared with Rs 14,205 crore over the same period last year. Analysts polled by Bloomberg estimated a profit of Rs 13,325.9 crore.
State Bank of India Q3 Highlights (Standalone)
Net profit: Rs 9,163.96 crore vs Rs 14,205 crore, down 35.4% (YoY).
Net interest income: Rs 39,815.73 crore vs Rs 38,069 crore, up 4.5% (YoY).
Gross NPA: 2.42% vs 2.55% (QoQ).
Net NPA: 0.64% vs 0.64% (QoQ).
Net interest income, or core income, for the lender rose 4.5% year-on-year to Rs 39,815 crore. Other income remained flat, falling 0.07% year-on-year to Rs 11,458 crore.
The bank's operating profit declined 19.36% year-on-year to Rs 20,336 crore. This was excluding the wage revision impact of Rs 6,313 crore. The domestic net interest margin also slipped 4 basis points sequentially to 3.41%.
Dinesh Kumar Khara, chairman of SBI, told reporters in a post-results media briefing that the lender would maintain NIM at current levels.
Asset quality improved with gross non-performing asset ratio falling 13 basis points to 2.42% quarter-on-quarter. Net NPA ratio remained flat sequentially at 0.64%.
The bank reported gross slippages in the December quarter at Rs 5,046 crore, out of which fresh slippages amounted to Rs 4,960 crore. The bank's slippage ratio increased 17 bps year-on-year to 0.58%. The recoveries and upgrades stood at Rs 1,798 crore, up 9.4% year-on-year.
The bank's chairman said that one SME account has led to a rise in slippages sequentially. "We will look at restructuring that SME account... slippages should not be a matter of concern," he said.
Provisions other than tax and contingencies (net of write-back) for the quarter fell 88% year-on-year to Rs 687.85 crore. Those for NPA rose 10.7% to Rs 1,756.95 crore on a yearly basis. Provision coverage ratio, or PCR, stood at 74.17%, down 195 bps year-on-year as of Dec. 31.
The lender made a one-time pension-related provision of Rs 7,100 crore, which showed as an exceptional item.
Khara told reporters that a court settlement on pension is in the offing. Provisions of Rs 5,400 crore have been on account of increase in pension, and a dearness relief neutralisation for 2022 retirees has been set at Rs 1,700 crore.
The bank's ad hoc provisioning against AIF exposures was at Rs 240 crore, according to Khara.
Operating expenses for the quarter rose 27.2% year-on-year to Rs 30,938 crore. Of this, employee cost increased 31.2% year-on-year to Rs 19,361 crore and other opex rose 21% to Rs 11,576 crore year-on-year.
The bank's gross advances grew 14.38% year-on-year to Rs 35.84 lakh crore, driven by retail personal and SME loans. Total deposits rose 13.02% year-on-year to Rs 47.62 lakh crore.
Sequentially, CASA ratio of the bank fell 7 basis points to 41.18%.
Khara explained that the fall in CASA ratio is due to flow of funds from savings to term deposits. Deposit growth is rebounding and deposit cost increase will not sustain, he said.
"The sustained credit growth momentum has increased the wedge between deposits and credit," he said. "Green deposits cater to customers inclined to support sustainability... We are trying to address aspirations of a certain segment of the society," he added.
The January-March credit growth is expected to be higher than October-December, he said.
SBI's credit cost for the December quarter stayed flat sequentially at 0.21%. On a yearly basis, too, it was flat.
Capital adequacy ratio stood at 13.05%, down 22 bps year-on-year.
The bank's Chairman explained that higher credit risk weights have hit CRAR by 70 bps and CET-1 by 49 bps.
The lender said it expects RoE to be greater than credit growth over the medium term, which could lead to CET-1 accretion. It is also open to raising growth capital if credit growth trends are higher than present expectations.
However, it doesn't foresee any immediate capital requirement. "On a net basis, the bank is capital adequate," Khara said.
The lender is also reaching out to merchants for onboarding them to SBI Payments, according to him. SBI Payments offers point-of-sale machines and QR codes.
