State Bank of India’s record profit led by retail loan growth, higher provisions

State Bank of India’s record profit led by retail loan growth, higher provisions


(SBI) recorded its highest quarterly net profit of Rs. 7,627 crores in quarter ended September 2021 up 67% from Rs 4574 crore in the previous year led by growth in retail loans and a marked improvement in asset quality which reduced provisions.

Total advances grew by 6%, driven by personal loans which grew 15% and a 11% growth in home loans more than covering for a 4% fall in the corporate loan book. Home loans now constitute 24% of the bank’s domestic advances.

Chairman Dinesh Khara expressed confidence that the bank will keep up the growth momentum in line with the economic growth which will also pull up the so far shrinking corporate loan book. India’s largest lender is hoping to grow its loan book by 10% this fiscal end March 2022.

“Capacity utlisation is still low at about 60%. Our undisbursed term loan facilities are at about 27% while 50% of working capital are unutilised. We have got a pipeline of Rs 1.15 lakh crore and we except that the unused term loans of Rs 2.25 lakh crore will also be utilised because there is a very clear visibility of demand. Capacity augmentation is happening and I hope by the end of the current and next quarter there will be a significant improvement in capacity utilisation which will help corporate credit come back,” Khara said.

A sharp fall in provisions also helped the bank enhance its net profit. Provisions halved to Rs 2699 crore down 51% from Rs 5619 crore a year ago due to improvement in loan collections a fall in slippages and a write back from the provisions made for Dewan Housing Finance Ltd (DHFL).

Slippages fell sharply to just Rs 4176 crore in September 2021 from Rs 15,666 crore in the quarter ended June 2021 as collection efficiency in retail loans improved to 95% after improvement in mobility post the devastating effects of the second wave of the pandemic.

Net NPA ratio fell to 1.52% down from 1.59% a year ago while the slippage ratio fell sharply to 0.66% down from 2.47% in June 2021 resulting in a 51 basis points decline in credit costs year on year. One basis point is 0.01 percentage point.

Khara did not give a clear guidance on asset quality but indicated that stress is on the decline.

“There are no major concerns on asset quality. Our unerwriting standards have improved and collection machinery has also imrpoved,” he said adding that the bank has made a 100% provision for its exposure to the bankrupt Srei Group.

The stronf retail loan performance and improvement in asset quality also allowed the bank to fully provide Rs 7,418 crores for a change in family pension rules in one quarter despite the regulator granting dispensation to amortise it in five years.



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