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.
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