SBI Q1 Results: Record Profits of Rs 16,884 Crore with 178% Surge; Notable Enhancement in Asset Quality

In the June quarter, SBI posted a standalone profit of Rs 16,884.29 crore, marking a significant increase from Rs 6,068.08 crore in the corresponding quarter of the previous year.

State Bank of India Limited (SBI) reported a remarkable 178.24% year-on-year (YoY) increase in standalone net profit, reaching Rs 16,884.29 crore for the June quarter, compared to Rs 6,068.08 crore in the same quarter last year. This marks the fourth consecutive quarter of record profits for the public sector lender, exceeding analysts’ expectations of 120-160% growth before the results were announced. The exceptional performance was primarily driven by higher-than-anticipated other income and treasury gains.

During the quarter, SBI’s Net Interest Income (NII) stood at Rs 38,905 crore, reflecting a 24.71% increase from Rs 31,196 crore in the corresponding quarter of the previous year. While the NII was slightly below Street estimates, Gaurav Jani, a Research Analyst at Prabhudas Lilladher, attributed it to softer loan growth.

For investment beginners, Q1 refers to the first quarter of the financial year, which spans from April to June. It is a crucial period when companies release their financial reports, giving investors valuable insights into their performance and financial health. In SBI’s case, the first quarter saw a significant surge in profits, making it a noteworthy time for the bank and its stakeholders.

Net interest margin (NIM) refers to the difference between the interest income earned by a bank from its loans and other interest-earning assets and the interest expenses paid on its deposits and other interest-bearing liabilities. It is an important measure of a bank’s profitability and efficiency in managing its interest income and expenses.

In the June quarter, the net interest margin (NIM) of the bank improved by 24 basis points compared to the same quarter last year, reaching 3.47%. However, it declined by 37 basis points from 3.84% in the previous quarter (March quarter).

The asset quality also showed improvement, as the gross non-performing assets (NPA) ratio decreased to 2.76%. This was 115 basis points lower than the NPA ratio of 3.91% in the same quarter last year. During the quarter, the bank set aside provisions amounting to Rs 2,501.31 crore, which was lower than both the provisions made in the previous quarter (Rs 3,315.71 crore) and the same quarter last year (Rs 4,392.38 crore).

The bank reported a significant increase in gross advances, reaching Rs 33,03,731 crore, a 13.90% growth compared to Rs 29,00,636 crore as of June 30, 2022. Deposits also showed healthy growth, rising by 12% year-on-year to Rs 45,31,237 crore from Rs 40,45,696 crore in the same period last year.

The slippage ratio, which measures the proportion of loans turning into non-performing assets (NPA), was recorded at 0.94%, higher than 0.41% in March but lower than 1.38% in the year-ago quarter. The credit cost, representing the expense of managing credit risks, stood at 0.32%, an increase from 0.16% in March but a decrease from 0.61% in the year-ago quarter.

According to Jani of PL, the loan yields at 8.9% and funding cost at 4.8% were in line with expectations.

The bank highlighted that total non-NPA provisions (not included in PCR) amounted to Rs 34,955 crores, which represented 152% of net NPAs at the end of Q1FY24, as mentioned in their presentation.

Here’s a list of finance terms explained in simple language :

1. Gross Income: The total amount of money you earn before any deductions, such as taxes or expenses.
2. Net Income: The amount of money you have left after deducting taxes and expenses from your gross income.
3. Savings Account: A bank account where you can deposit and save your money, typically offering lower interest rates but easy access to funds.
4. Interest Rate: The percentage at which a bank pays you for keeping your money in a savings account or charges you for borrowing money.
5. Loan: Money borrowed from a bank or lender that you have to repay with interest over a set period.
6. Credit Score: A numerical representation of your creditworthiness, which lenders use to determine your ability to repay loans.
7. Budget: A plan that outlines your income and expenses, helping you manage your money and spend wisely.
8. Inflation: The gradual increase in the prices of goods and services over time, reducing the purchasing power of your money.
9. Stock Market: A place where shares of companies are bought and sold, allowing investors to own a portion of those companies.
10. Dividend: A portion of a company’s profits paid to its shareholders as a return on their investment.
11. Asset: Anything you own that has value, such as your home, car, or investments.
12. Liability: Any financial obligation or debt you owe, such as a loan or credit card balance.
13. Compound Interest: Interest that is calculated not only on the original amount but also on the accumulated interest, resulting in faster growth of your savings.
14. Portfolio: A collection of your investments, including stocks, bonds, and other assets.
15. Equity: The value of an asset minus any liabilities, representing your ownership or stake in that asset.
16. Diversification: Spreading your investments across different types of assets to reduce risk.
17. Mutual Fund: An investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities.
18. Credit Card: A payment card that allows you to borrow money from a bank or issuer to make purchases, which you need to repay later with interest.
19. APR (Annual Percentage Rate): The annual cost of borrowing money, including interest and fees, expressed as a percentage.
20. Insurance: A financial product that provides protection against potential financial losses, such as health, car, or home insurance.Sources
    1.https://www.businesstoday.in/markets/company-stock/story/sbi-q1-results-profit-surges-178-to-rs-16884-crore-asset-quality-improves-392840-2023-08-04
    2.https://www.reuters.com/world/india/state-bank-india-q1-profit-nearly-triples-2023-08-04/

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