State Bank of India on May 13 reported a 41 percent year-on-year rise in net profit at Rs 9,113.5 crore for the quarter ended March 2022 (Q4FY22), which was below Street's estimate of Rs 9,927.6 crore.
SBI's net profit for Q4FY22 was its highest ever but it still underwhelmed the Street as expectations were on the higher side. The bank's shares slipped a little over 1 percent in response to the quarterly results.
The net profit growth was on the back of a 15.3 percent growth in net interest income which stood at Rs 31,198 crore. This too was lower marginally versus analysts' expectations of Rs 31,570 crore.
Non-interest income disappointed, slipping 27 percent year-on-year. But on a sequential basis, non-interest income jumped 37 percent while NII growth was a mere 1.6 percent.
The lender's operating profit was flat year-on-year and showed modest growth of 6.4 percent sequentially. This could be attributed to an increase in operating costs for the bank. The lender expects to reduce some of its costs in the coming quarter, chairman Dinesh Khara said in a press meet post the release of the results.
Notwithstanding the modest operating metrics, the bank's loan book grew at a decent 11 percent. Khara said that the loan book growth is broad based with both retail and corporate showing strong growth. "We should continue to see the loan growth we have seen in the past both in retail and corporate," he said. SBI's retail loan book growth continued to outpace that of its corporate loan book. Retail loans showed a growth of 15.11 percent, driven by home loans while corporate loans showed a growth of 6.3 percent from the year-ago period.
Khara said that credit growth would continue to improve going forward and that the bank was seeing demand from various sectors. He added that SBI has an unused working capital limit of Rs 2 lakh crore which he expects to be used fully as Indian companies begin to increase their investments and capacity utilisation improves.
Asset quality
Even as the bank reported an improvement in loan growth, SBI's strong point was its asset quality in Q4FY22.
The lender continued to see sequential improvement in asset quality as the gross non-performing assets ratio declined to 3.97 percent from 4.5 percent in the previous quarter. Similarly, the bank's net NPA ratio fell to 1.02 percent in the reported quarter from 1.34 percent in the previous quarter.
What's more is that fresh slippages were just Rs 2,845 crore for the quarter, down by 12.4 percent from the year-ago period. The bank had guided for the slippage ratio to be brought down to 2 percent and Khara indicated that this would be achieved easily.
When asked about the bank's exposure to troubled accounts such as Future Group, Khara said that all stressed exposures have been adequately provided for. He refrained from detailing the extent of SBI's exposure to troubled accounts.
SBI's restructured loan accounts were roughly Rs 30,000 crore or 1.1 percent of its total loan book. The book is fully provided for, the bank said.
Given the reduced stress, the bank's provisions for the quarter fell 67 percent year-on-year, another boost for profits.
The lender's board also recommended a dividend of Rs 7.1 per share for the financial year ended March 31, 2022.
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