NEW DELHI : The country’s largest lender, government-owned State Bank of India (SBI), has announced underwhelming third quarter financial results with net profit showing a year-on-year decline of 35.5% to Rs 9,164 crore. This is below the market expectation of over Rs 13,200 crore.
The decline was owing to one-time expense of Rs 7,100 crore on account of the estimated liability of pension in place of its existing dual rate of calculation of pension and ex-gratia benefit and neutralization of dearness relief to pre-November 2002 retirees and family pensioners.
The bank also missed the market estimate for Net Interest Income (NII). The third quarter FY24 NII of the bank grew at 4.6% year-on-year to Rs 39,816 crore against the market estimate of over Rs 40,100 crore. Non-interest income in the third quarter also registered a small decline at Rs 11,459 crore compared to Rs 11,468 crore in the same quarter last year. However, sequentially non-interest income grew at 6.19% over Rs 10,791 crore. Fee income of the banks grew at 5.3% to Rs 6,241 crore.
Domestic net interest margin (NIM) of the bank in the third quarter was 3.34%, down 35 basis points year-on-year and 9 basis points quarter-on-quarter. Yield on loans/advances for the bank in Q3 of the current financial year was 8.88%, up 99 basis points year-on-year and 2 basis points quarter-on-quarter.
The cost of deposit for the bank rose from 3.90% in December 2022 quarter to 4.75% in same quarter in 2023. The fall in NIM of the bank could also be attributed partly to drop in low-cost CASA (Current account and Savings Account) deposits. CASA deposit of the bank in third quarter stood at 41.18%, down 330 basis point year-on-year and 70 basis points quarter-on-quarter.
The bank, however, reported improvement in asset quality with gross NPA falling by 72 basis points year-on-year to 2.42% during the quarter. Sequentially, the bank reported 13 bps drop in gross NPA. Net NPA stood at 0.64%, down 13 bps Y-o-Y. Slippage ratio increased to 0.55% during the quarter from 0.46% in Q2FY23 and 0.41% Q3FY24.
SBI witnessed credit growth of 14.38% Y-o-Y to Rs 35.84 lakh crore with domestic advances growing by 14.47%. Corporate advances and SME Advances crossed Rs 10 lakh crore and 4 lakh crore, respectively.
Foreign Offices’ Advances grew by 13.90% YoY. Domestic loan growth was driven by SME Advances (19.24% YoY) followed by Agri Advances which grew by 18.12% year-on-year. Retail personal loans and corporate loans registered year-on-year growth of 15.28% and 10.71%, respectively.
Deposits grew by 13% to Rs 47.62 lakh crore. Domestic term deposits grew by 19.54% to Rs 26.86 lakh crore, while domestic CASA deposits grew at 4.5%. Capital Adequacy Ratio of the bank at the end of third quarter stood at 13.05%, down 22 bps year-on-year.