India's top lender SBI posts record quarterly profit in Q4, tops view
MUMBAI (Reuters) -State Bank of India, the country's largest lender, on Thursday reported a more than 83% jump in fourth-quarter profit, led by a sharp drop in provisions on bad loans and healthy credit growth.
Net profit was at a record 166.95 billion rupees ($2.04 billion) for the quarter ended March 31, compared with 91.14 billion rupees a year earlier, the lender said in an exchange filing. That was sharply higher than analysts' expectations of 151.99 billion rupees, as per Refinitiv IBES data.
Provisions and contingencies more than halved to 33.16 billion rupees amid an improvement in asset quality. The lender's gross non-performing assets (NPA) ratio -- a key metric of asset quality -- fell to 2.78%, the lowest in more than 10 years, from 3.14% in the previous quarter and 3.97% a year ago. The net NPA ratio improved to 0.67% from 0.77% in the prior three months. Lenders have cleaned up their balance sheets over the past few years following better credit growth, bad loan recoveries and write-offs.
SBI's net interest income, the difference between interest earned and paid, jumped 29.5% from a year earlier to 403.93 billion rupees. Net interest margin, a key indicator of a bank's profitability rose to 3.84% from 3.40%.
The bank's gross loans increased by nearly 16%, while deposits climbed 9.2%, largely led by term deposits.
Indian banks have been reporting double-digit credit growth in recent months even as the Reserve Bank of India (RBI) raised interest rate by 250 basis points since last May. Meanwhile the growth in deposits lagged behind loans.
SBI is "quite hopeful" of seeing credit growth in the 12% to 14% range this fiscal year, Chairman Dinesh Kumar Khara said in a virtual post-earnings news conference.
The state-run lender's corporate loan sanctions amounted to 1.75 trillion rupees, while total loan sanctions were 3.5 trillion rupees, Khara said, adding that sectors such as renewables, infrastructure, ports and aviation are seeing good credit demand.
Going forward, deposits will not be a limiting factor to expand the bank's loan book, Khara said. The lender also plans to seek board approval to raise funds via bonds, he added.
SBI's shares closed down 2.1% at 574.15 rupees after logging their worst intra-day percentage drop since March 20 earlier in the session. The shares have risen nearly 10% since April 1, when the earnings season began.
They have fallen 6.4% so far this year, compared to a 2.2% rise in the Nifty Bank Index.
($1 = 81.7800 Indian rupees)
(Reporting by Siddhi Nayak in Mumbai; Editing by Dhanya Ann Thoppil)