India’s biggest public sector bank (PSB) State Bank of India (SBI) on Thursday reported a 6.9 per cent year-on-year (YoY) drop in standalone net profit at Rs 5,196.22 crore for quarter ending December, 2020 (Q3FY21). The fall was largely driven by marginal increase in provisions against bad loans.In the year-ago period, the lender had clocked a net profit of Rs 5,583.4 crore. On a quarterly basis, the PAT grew 13.6 per cent from Rs 4,574.2 crore reported in the September quarter of FY21 (Q2FY21).
The bottom-line earning beat Street estimates which had factored-in an up to 58 per cent YoY drop in PAT. The lowest PAT estimate was by HDFC Securities, at Rs 2,360 crore.
SBI's profit before tax (PBT) came in at Rs 6,990.77 crore the quarter, down 36.2 per cent YoY from Rs 10,969.66 crore reported in the corresponding quarter of the previous fiscal. On a quarterly basis, PBT climbed 10.2 per cent from Rs 6,341.45 crore clocked in Q2FY21.
Operating performance
State Bank reported operating profit of Rs 17,333.16 crore for the third quarter of this fiscal, as against Rs 18,222.56 crore in Q3FY20, translating to a 4.8 per cent decline.
"Excluding the one-off interest income and other income during Q3FY20, the YoY growth in net profit and operating profit for Q3FY21 would be 133.78 per cent and 26.23 per cent, respectively," the bank said in a statement.
Net interest income – or income derived by subtracting interest paid on loans from interest received on deposits – was up 3.7 per cent YoY at Rs 28,820 crore during the quarter under study, as against Rs 27,778.8 crore in Q3FY20. It increased 2 per cent QoQ from Rs 28,181.5 crore reported in Q2FY21.
Domestic net interest margin (NIM) for the quarter remained stable sequentially at 3.34 per cent.
Loan Book
The PSB's total gross advances increased 6.7 per cent on year to Rs 24.56 trillion, relative to Rs 23.01 trillion. Sequentially, the loan book grew 3 per cent from Rs 23.83 trillion.
Of this, domestic corporate loans stood at Rs 7,88,208 crore (up 2.23 per cent YoY), while retail loans were at Rs 8,31,134 crore (up 15.5 per cent YoY).
Meanwhile, deposits jumped 13.6 per cent YoY to Rs 35.35 trillion, the bank's financial statement shows.
"Credit Cost as at the end of 9MFY21 has declined 85 bps YoY to 0.38 per cent, whereas Cost to Income Ratio has marginally increased from 52.45 per cent in 9MFY20 to 53.25 per cent in 9MFY21," it said in a statement.
Asset quality
The bank's gross non-performing assets (GNPA) declined 7 per cent quarterly to Rs 1.17 trillion during the quarter under review, compared with Rs 1.26 trillion in the September quarter. In the year-ago quarter, the GNPAs were Rs 1.59 trillion. In percentage terms, GNPA ratio was 4.77 per cent compared with 5.28 per cent QoQ, and 6.94 per cent YoY.
NNPA, on the other hand, stood at Rs 29,031.72 crore, down 20.3 per cent QoQ from Rs 36,450.69 crore QoQ. NNPA ratio was at 1.23 per cent in the quarter under study.
"In the absence of the Supreme Court's order, the GNPA and NNPA would have been at 5.44 per cent and 1.81 per cent, respectively," it added.
The bank has received restructuring applications for loans worth Rs 18,125 crore in Q3FY21, well within guidance
Provisions
Total provisions for the quarter were Rs 10,342.39 crore, of which provisions for NPA were Rs 2,290.38 crore. In the year-ago period, total provisions were at Rs 7,252.9 crore, of which Rs 8,193.06 crore were earmarked for NPAs. At the end of Q3FY21, the bank held total Covid-19 related provisions worth Rs 12,976 crore.
Provision Coverage Ratio (PCR), the bank said, has improved to 90.21 per cent, up 848 bps YoY and 202 bps QoQ.
Fresh slippages during the quarter came in at Rs 237 crore, plunging 98.5 per cent YoY and 91.4 per cent QoQ from Rs 16,525 crore, and Rs 2,756 crore, respectively.
"Slippage ratio as on 31st Dec 2020 at 1.27 per cent (including proforma slippages); collection Efficiency is at 96.5 per cent," the bank said.
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