State Bank of India records 74% surge in Q2 profit, asset quality improves

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26 Aug, 2025 12:21

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State Bank of India (SBI) reported a net profit of Rs 13,264 crore for the September quarter, a surge of 74 percent from a year earlier on improved asset quality and healthy loan growth.

The state-run lender’s profit beat street estimates by a mile. A Moneycontrol poll of eight brokerages had forecast net profit to be Rs 10,616.2 crore. While the sharp increase in quarterly profit comes from a healthy core interest income growth owing to a smart increase in credit expansion, there is a base effect at play also.

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In the September quarter of FY22, SBI had made exceptional provision of Rs 7,418 crore towards employee pension costs which had dented its profits then. Ergo, the net profit growth for September quarter in the current year shows a larger increase.

Nevertheless, loan growth of 20 percent year-on-year lifted core interest income and also operating profit growth. SBI reported a 16.8 percent increase in its operating profit for the September quarter. Sequentially, the increase in operating profit was a sharp 65.6 percent.

The largest Indian lender's net interest income rose 12.83 percent to Rs 35,183 crore for the reported quarter, keeping with the improving trend of the previous two quarters. The bank’s interest earned rose 15 percent to Rs 79,859.59 crore while interest expended was Rs 44,676.15 crore, up from Rs 38,298 crore a year ago.

Asset quality shines

SBI’s gross non-performing assets were 3.52 percent of the total loan book, down from 4.90 percent a year ago. This is the lowest NPA ratio reported by the bank since FY12. The total gross bad loan pile reduced by 14 percent year-on-year and now stands at Rs 1.06 lakh crore.

In essence, a reduction in bad loan pile as well as a sharper loan growth has improved asset quality ratios in a big way. On a net basis, bad loans were 0.80 percent of the loan book compared with 1.52 percent a year go. This meant that the bank’s loan loss provisioning requirements have come down. For the September quarter, SBI provided Rs 2,011 crore towards bad loans, which was 25 percent less than what it did a year ago. The bank’s slippage ratio and credit costs also declined sharply from year-ago levels. The slippage ratio fell to 0.33 percent for the reported quarter while its credit cost fell 15 basis points to 0.28 percent.