SBI Q4 Results: Profit Up 24% On Higher Other Income, Lower Provisions
SBI saw its net profit rise to Rs 20,968 crore during the fourth quarter, as compared with Rs 16,695 crore.
India's largest lender State Bank of India reported a net profit rise of 24% in the quarter-ended March 31, 2024, as other income increased and a drawdown in provisions.
SBI saw its net profit grow to Rs 20,968 crore during the fourth quarter, as compared with Rs 16,695 crore. Sequentially, the bottom line jumped 125%. Analysts polled by Bloomberg had estimated a net profit of Rs 12,340 crore for the quarter.
Net interest income, or core income, rose 3% year-on-year to Rs 41,655 crore in the January-March quarter. The bank reported a 24.4% year-on-year rise in other income in Q4 to Rs 17,369 crore.
Other income includes fee income, earnings from foreign exchange and derivative transactions, profit or loss on sale/revaluation of investments, dividend from subsidiaries and recoveries made in written-off accounts.
"The rise in other income is a reflection of our growing loan book," Dinesh Kumar Khara, chairman of State Bank of India, said in a post-earnings media briefing. "Our fee income improved on better loan application fee and other components. We are seeing growth in forex income and cross-selling income, and we hope to sustain this rise."
SBI Q4 FY24 Earnings Highlights (Standalone)
Net profit up 23.9% to Rs 20,698 crore (YoY).
Net interest income rose 3% to Rs 41,655 crore (YoY).
Gross NPA down 18 bps at 2.24% (QoQ).
Net NPA down 7 bps to 0.57% (QoQ).
SBI's net interest margin stood at 3.47% in the March quarter in comparison to 3.34% in the previous quarter. Khara is hopeful of maintaining margins at current level.
Provisions held by the bank declined 51.4% on a yearly basis to Rs 1,609.8 crore during the quarter under review. Of this, NPA-related provisions jumped 157% year-on-year to Rs 3,293.9 crore for Q4.
The provision coverage ratio, as on March 31, stood at 75.02%.
Provisions against unhedged FX exposure held by the bank were at Rs 250.7 crore as on March 31. The bank also set aside total provisions of Rs 75,877.09 crore towards arrears of wages due for revision, on account of bipartite wage settlement.
"We are well-provided for loan book, and conscious of areas of further improvement," Khara said.
The balance of Rs 1,742.23 crore is yet to be disbursed towards residual salary revision and ex-gratia for pensioners, the bank said in its earnings release.
In terms of advances, the public sector bank reported a 16.3% year-on-year rise in domestic advances to Rs 32.28 lakh crore. The growth in corporate advances outpaced the rise in retail advances, with corporate loans rising 16.2% year-on-year to Rs 4.33 lakh crore during the quarter under review. Retail advances, however, gained 14.7% year-on-year to Rs 13.5 lakh crore.
Credit growth has been robust across segments, Khara said. However, growth in unsecured retail loans has moderated. The chairman expects a credit growth of 15-16% in FY25.
Domestic deposits also rose 11.07% year-on-year to Rs 47.24 lakh crore during the quarter. Going forward, the deposit growth is seen at 12-13%, he said.
"We are mindful of liability portfolio, and ensuring that dependence on wholesale funding is contained," Khara said.
Current Account Savings Account deposits are up 4.25% year-on-year to Rs 19.41 lakh crore. The bank is focused on improving share in current account deposits and aims to lower cost-to-income ratio. The bank's cost-to-income ratio stood at 49.34% in Q4.
In the March quarter, the bank's credit cost fell by 3 basis points year-on-year to 0.29%.
In terms of Reserve Bank of India's draft regulations on project finance, Khara said that it is too premature to comment. Initial assessment shows that incremental provisions will not be significant for the lender. "If the provisions are required to be made, the pricing of such loans will need to be reviewed," he said.
There are many entities that are not pricing project finance risk adequately. SBI has created a specialised capacity to appraise projects, according to Khara.
SBI's capital adequacy ratio stood at 14.28% as of March 31, as compared with 14.68% a year ago. The CET-I ratio in the March quarter was at its highest since the introduction of Basel III norms, at 10.36% from 10.27% a year ago. The bank is open to raising equity capital going forward, he said.
The bank is focused on investing in technology, and its digital banking app Yono will be in a position to roll out a new digital product soon, Khara said. The bank has started building cadre for technology, and hiring from the market to improve skills, the management said.
Fresh slippage during the quarter stood at Rs 3,867 crore, compared with Rs 4,960 crore in the previous quarter. Recoveries and upgradations stood at Rs 2,052 crore in Q4, from Rs 1,798 crore a quarter ago. "We have seen some small value slippages during the quarter... recovered about Rs 800 crore in Q4," Khara said.
SBI declared a final dividend of Rs 13.70 per share.
Shares of SBI closed 1.14% higher at Rs 819.65 apiece on the BSE after the results were announced, compared with a 1.45% decline in the benchmark Sensex.
