SBI Q2 net rises 67% on asset quality, lower provisions

State Bank of India (SBI) reported second quarter net profit surged 66.7% to ₹7,627 crore due to improvement in asset quality and lower provisions for bad loans.

In a filing, India’s largest lender said it had recorded its highest quarterly net profit.

“The outcome in asset quality during the quarter has been quite encouraging,” said chairman Dinesh Khara. “The first quarter saw elevated levels of fresh slippages as collections were severely impacted due to COVID-related travel restrictions,” he pointed out.

“Now there is no major concern relating to asset quality because underwriting has improved significantly,” he added, saying the bank expected its loan look to expand 10% in FY22.

During the quarter, profit rose 9.84% to ₹18,079 crore. The lender has fully provided ₹7,418 crore due to the change in family pension rules, even though the regulator had granted dispensation to amortise over five years.

Profitability was aided by a 10.7% increase in net interest income to ₹31,184 crore. Domestic net interest margin climbed 16 basis points to 3.5%. The bank made loan-loss provisions of ₹2,699 crore compared with ₹5,619 crore a year earlier, recording a drop of 52%

Gross non performing assets (NPAs) dipped 1.53% to ₹123,942 crore. However, net NPAs rose 1.83% to ₹37,119 crore. Slippages climbed 51.5% to ₹4,176 crore.

Total deposits grew at 9.77% while advances rose 6.17%, mainly driven by Personal Retail Advances (15.2% growth) and Foreign Office Advances (16.2%). Domestic Advances grew 4.61% and home loans, which constitute 24% of the bank’s domestic advances, climbed 10.7%.

Net NPA ratio dipped 7 basis points to 1.52%, while the gross NPA ratio declined at 38 bps to 4.9%. Provision Coverage Ratio (PCR) stood at 87.68%.