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The net profit of State Bank of India (SBI), India’s largest commercial bank, has crossed the Rs 50,000-crore mark to a record Rs 50,232 crore during the financial year ended March 2023, a rise of 59 per cent from the previous year. The profit for the quarter ended March 2023 jumped by over 83 per cent to Rs 16,695 crore from Rs 9,114 crore in the same period a year ago as the asset quality of the bank improved significantly.
The bank also hiked the dividend to Rs 11.30 per share as against Rs 7.10 last year.
Why did shares fall?
Despite posting better profits, the bank’s share closed 1.77 per cent lower at Rs 576.10 on the BSE on Thursday even as the Sensex closed 0.21 per cent down at 61,431.74. “The market was expecting SBI to post record profits. There was no surprise at all. There was profit-booking after the results announcement,” said an analyst with a broking firm.
Why did the profits rise?
SBI Chairman Dinesh Khara said the reason for the better performance is the improvement in the asset quality of the bank. The bank’s gross non-performing assets (NPAs) declined to Rs 90,928 crore (2.78 per cent of the advances) in March 2023 from Rs 112,023 crore (3.97 per cent of advances). Gross NPAs are at 10-year lows. “We are on the top in control and follow-up of the services,” Khara said.
Credit cost of the bank for the year at 0.32 per cent improved by 23 bps on a year-on-year basis. Domestic net interest margin (NIM) at 3.58 per cent for the year improved by 22 bps when compared to the last year. Net interest income (NII) for FY23 increased by 19.99 per cent for the year as credit growth improved.
What about credit offtake?
The bank’s advances rose by 15.99 per cent to Rs 32.69 lakh crore. While retail loan portfolio amounted to Rs 11.8 lakh crore, home loans accounted for Rs 6.40 lakh crore, showing a growth of 14.07 per cent. The bank’s market share in home loans is 33.1 per cent and auto loans is 19.4 per cent. “There has been a robust growth across all the segments,” Khara said.
Corporate credit offtake showed a growth of 12.52 per cent in FY23. On the other hand, retail personal loans grew by 17.64 per cent, agri loans by 13.31 per cent and SME by 17.59 per cent.
And deposits?
On the deposit rate hike, Khara said, “Much of it will depend on the function of the market. Much of the rise is because of the rise in Repo rate. There are multiple reasons for it.” Total domestic deposits were at Rs 42.54 lakh crore as of March 2023. Whole bank deposits grew at 9.19 per cent YoY, out of which CASA deposit grew by 4.95 per cent. CASA ratio stands at 43.80 per cent as of March 2023.
The bank now offers an interest rate of 6.8 per cent to 7 per cent for deposits less than Rs 2 crore and maturing between one year to less than three years. For longer-term deposits — three years and up to 10 years — SBI offers an interest rate of 6.5 per cent. Senior citizens can get an additional interest rate of 0.5 per cent on these tenors.
