Lower provisions for bad loans and sale of stake in one of the subsidiaries enabled State Bank of India (SBI) — the country’s largest lender — to report a 327% year-on- year increase in net profit to ₹3,581 crore for the January-March quarter.

While net interest income growth was flat at ₹22,767 crore, non-interest income rose by almost 27% year-on- year to ₹16,077 crore with profit on sale of investment surging to ₹3,237 crore compared with the ₹534 crore reported during the same period of the previous year.

This is because SBI sold a part of its stake in SBI Cards during the initial public offering.

Loan loss provisions also came down 31.4% to ₹11,894 crore in the fourth quarter.

Slippages to bad loans saw an increase of 8% year-on- year to ₹8,150 crore during the fourth quarter, though it was almost half of the previous quarter.

“Consistently, quarter-after-quarter we have been able to improve our asset quality and provision coverage ratio (PCR),” SBI chairman Rajnish Kumar said in the post earnings interaction with the media. “The PCR is at an all- time high. On the corporate book, the bank holds PCR of almost 78%,” he said. SBI’s PCR was at 83.62%, including advances under collection accounts (AUCA).

The gross NPAs declined 14% year-on-year (YoY) to about ₹1.49 lakh crore while net NPAs declined 21.3% to ₹51,871 crore. As on March 31, the gross NPA ratio was at 6.15% while net NPA ratio was at 2.23%.

“We have not taken regulatory dispensation on provision of standstill accounts. We have provided as if fresh slippage of ₹6,250 crore has happened,” Mr. Kumar said.

The SBI said the loan moratorium was availed of by about 21.8% of the customers, which came to about 23% of term loans. The bank said there would be lower stress on the retail book due to COVID-19-related disruptions as they have a higher proportion of government and quasi-government sector customers.

However, there could be pressure on core other income which is driven by recoveries and fee income. Recoveries are expected to be impacted, it said. The bank has sanctioned ₹17,116 crore loans related to COVID-19; however, disbursements are expected to pick up once the lockdown ends. The bank saw deposit growth of 11.34% year-on- year in FY20 while advances grew by 5.64%.

Home loans rise

“Home loans, which constitute 22% of the bank’s domestic advances, have grown by 13.86% YoY,” SBI said. Loan growth is expected to be at about 7-8% in the current financial year.

Mr. Kumar said the bank had created a capability to serve the entire Indian subcontinent. “Today, we serve 49 crore customers which is more than the population of Latin America and continental Europe or the U.S.

“Believe me, we have the capability of serving the entire Indian subcontinent. That is the digital capability that the bank has created,” he said. “On a single day, on March 31, over 25 crore transactions were handled.”

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