Mumbai: The country’s largest lender SBI reported a net profit of Rs 5,191 crore for the quarter ended December 2020, a drop of 7% from Rs 5,583 crore in the previous year, which was driven by a one-time recovery of Rs 11,000 crore from Essar Steel. The bank’s net profit was up nearly 14% from Rs 4,754 crore in Q2FY21.
SBI’s stock jumped by 6% after the bank’s chairman Dinesh Khara said that loan slippage (into default category) could be lower than the Rs 60,000 crore projected earlier and that the lender was expecting to hit double-digit credit growth as early as Q2FY22.
Khara said SBI had received restructuring requests for loans worth Rs 18,125 crore and that it had made adequate provisioning for bad loans. He said the bank would support a national asset reconstruction company (bad bank), which will take over non-performing loans from lenders. SBI would not have to make additional provisions on loans that are transferred to the bad bank as they have already been provided for, he said.
The bank’s deposit grew 14% year-on-year, of which current accounts grew by 11% and savings accounts 16%. Loans grew 7% driven by retail advances, which rose 16%. Corporate advances grew just over 2%. However, if investments in commercial paper and corporate bonds of Rs 44,161 crores were included, the growth in the corporate loan book works out to 8%. Home loans, which constitute 23% of the bank’s domestic advances, grew by 10% year-on-year.
“SBI’s asset quality picture within the guidance is a positive surprise. Third-quarter slippages of around Rs 2,073 crore and new restructuring in Q3 stood at Rs 18,125 crore. This brings stressed assets status as of December at Rs 41,000 crore within the guided Rs 60,000 crore (i.e. 2.5% of loans as total stress including slippages). Total provisioning for the quarter stood at Rs 10,342 crore, which includes Covid-19 provisioning of Rs 5,885 crore. Overall, Covid provision now stands at Rs 12,976 crore,” said ICICI Securities in a note.
SBI’s stock jumped by 6% after the bank’s chairman Dinesh Khara said that loan slippage (into default category) could be lower than the Rs 60,000 crore projected earlier and that the lender was expecting to hit double-digit credit growth as early as Q2FY22.
Khara said SBI had received restructuring requests for loans worth Rs 18,125 crore and that it had made adequate provisioning for bad loans. He said the bank would support a national asset reconstruction company (bad bank), which will take over non-performing loans from lenders. SBI would not have to make additional provisions on loans that are transferred to the bad bank as they have already been provided for, he said.
The bank’s deposit grew 14% year-on-year, of which current accounts grew by 11% and savings accounts 16%. Loans grew 7% driven by retail advances, which rose 16%. Corporate advances grew just over 2%. However, if investments in commercial paper and corporate bonds of Rs 44,161 crores were included, the growth in the corporate loan book works out to 8%. Home loans, which constitute 23% of the bank’s domestic advances, grew by 10% year-on-year.
“SBI’s asset quality picture within the guidance is a positive surprise. Third-quarter slippages of around Rs 2,073 crore and new restructuring in Q3 stood at Rs 18,125 crore. This brings stressed assets status as of December at Rs 41,000 crore within the guided Rs 60,000 crore (i.e. 2.5% of loans as total stress including slippages). Total provisioning for the quarter stood at Rs 10,342 crore, which includes Covid-19 provisioning of Rs 5,885 crore. Overall, Covid provision now stands at Rs 12,976 crore,” said ICICI Securities in a note.
