MUMBAI: The nation’s largest lender State Bank of India (SBI) has reported a 10% annualised drop in net income for the March quarter at Rs 18,642.59 crore, as against the Rs 20,698.35 crore it had booked in the year-ago period despite strong core income growth which got whittled down by steeply lower other incomes especially from the treasury desk. However sequentially the bank booked a healthy 10.37% jump in net income.
Chairman CS Setty told reporters that the bottomline decline was primarily because of exceptionally higher base in the year ago period along with a surge in provisions for the aging loans. Loan loss provisions surged 20.35% to Rs 3,964 crore from Rs 3,294 crore most of which came from aging loans. But despite this the bank which controls more than a fifth of the system wide assets at close to Rs 43 trillion and deposits of over 54 trillion brought down its gross bad loans piles to under 2% of the assets at 1.82% down 43 bps on year and the net bad loans to under 0.5% at 0.47% an improvement of 10 bps. Driven by solid loan growth the bank reported in the core net interest income (NII) of Rs 42,774.55 crore up 2.8%, the chairman said.
The key profitability gauge the net interest margin dropped 32 bps to 3.15% compared to 3.47% and Setty guided towards more margin compression as he expects the repo rate to fall at least by 50 bps more this fiscal beginning the next policy review next month and which will lead first to an asset repricing and then deposits.
“Ultimately there has to be better transmission of the rate action by the central bank. While assets repricing happens faster liabilities take time but has to be done at some point in time,” he said, adding current lot 29% of the loans are linked to the repo rate, 31.7% to the McLR and 27% are on fixed rates.
Unlike most other banks, SBI has given a guidance on growth numbers. Other large peers like HDFC Bank, ICiCI and Axis have not offered any guidance this fiscal citing the volatility from tariff tantrums and the border tension with Pakistan. However the chairman offered a moderate growth forecast with loans at 12-14% down for the mid last fiscal guidance of 15-16% and 11-12% uptick in deposits. For the reporting quarter the bank said its loans grew by 12.03% to Rs 42.2 trillion and the 9.4% to Rs 53.83 trillion.
The SBI has declared a dividend of Rs 15.90 per share for the quarter.
The provision coverage ratio was reported at 74.42%, which improved by 60 bps. The slippage ratio for FY25 improved by 7 bps and stands at 0.55%. Additionally, the slippage ratio improved by 1 bp and stands at 0.42%.
The state lender’s credit cost for FY25 stands at 0.38% and its capital adequacy ratio as at the end of FY25 stands at 14.25%.
The credit cost for FY25 stands at 0.38% and its capital adequacy ratio as at the end of FY25 stands at 14.25%.
Further, SBI informed its plan to raise equity capital of up to Rs 25,000 crore during this fiscal. This may be done through QIPs , rights issue, or preferential allotment.
SBI shares closed 1.5% higher at Rs 800.05 on the BSE on Friday.