The country's largest lender State Bank of India (SBI) on Wednesday reported a 55.41% rise in consolidated net profit at Rs 5,245.88 crore for the second quarter ended September 30 on account of decline in bad loans. The bank's net profit stood at Rs 3,375.40 crore in July-September quarter of the previous fiscal.
On a standalone basis, the bank's net profit rose nearly 52% to Rs 4,574 crore driven by lower provisions and higher growth in net interest income. Its net profit stood at Rs 3,012 crore in the year-ago period. "Our assessment indicates an upward movement in economic activities. Most companies are suggesting that the activity levels are touching 70-80% of the pre-COVID levels. Vehicles registration, including tractors, are increasing. There are signs that the economy is recovering," the bank's chairman Dinesh Khara told reporters.
Net interest income grew 14.56% to Rs 28,181 crore during the quarter as against Rs 24,600 crore last year. Domestic net interest margin for the quarter stood at 3.34% as compared to 3.22% a year ago. The lender has received one-time restructuring applications worth Rs 6,495 crore so far and has provided Rs 650 crore for it. Of this, Rs 2,400 crore is from the retail book and the rest from the corporate book.
"Of the Rs 2,400 crore, it is predominantly MSME (micro, small and medium enterprises). Retail per se is only 2,600 people have applied for restructuring of personal loans and home loans only 4,291 people have applied for recast," the bank's managing director (retail and digital banking) C S Setty said.
"Together personal and home loan constitute Rs 1,300 crore and the rest is coming from about 35,000 MSMEs," Setty added.
In the corporate segment, the lender has received restructuring requests from 42 customers who account for about Rs 4,000 crore of loans. Khara expects additional restructuring of Rs 13,000 crore up to December 2020. "It may not be so, but it is a very liberal estimate which we have taken," he said, adding that request for restructuring would largely come from corporates and a bit from MSMEs.
The bank's gross non-performing assets (NPAs) ratio stood at 5.28% as against 7.19% a year ago. Net NPAs improved to 1.59% compared to 2.79%. Total provision declined 21.74% to Rs 11,886 crore during the quarter from Rs 15,187 crore in the corresponding quarter of the previous year.
Provision coverage ratio (PCR) improved to 88.19%, while fresh slippages stood at Rs 2,756 crore.
"When it comes to slippages in various sectors, I would like to mention that the fresh slippages are more in the agriculture sector and also in the SME sector. In SME, we have been successful in pulling back to a greater extent. Corporate slippages have come down significantly," Khara said.
The bank has estimated Rs 20,000 crore of slippages during the second half of the current fiscal. Its collection efficiency for domestic loan book (excluding agriculture segment) stood at 97% at the end of Q2 FY21.
Total deposits grew 14.41% year-on-year, out of which current account deposits grew 8.55%, while saving bank deposits grew by 16.28%. Credit growth stood at 6.02%, mainly driven by retail (personal) advances (14.55%). "Retail will continue to be our major lever for growth going forward as well," Khara said.
The lender expects credit growth in FY21 to be at 8-9%. Capital Adequacy Ratio (CAR) improved by 113 basis points year-on-year to 14.72% at the end of September 2020. Shares of SBI on Wednesday closed 1.12% higher at Rs 207.05 apiece on the BSE.