SBI reports record growth as Opposition claims banking sector will collapse

The country's largest lender SBI on Friday reported a 62 per cent rise in its net profit to Rs 15,477 crore for the December 2022 quarter, helped by core income growth and improvement in asset quality.

On a standalone basis, State Bank of India's post-tax profit grew to Rs 14,205 crore during the October-December 2022 period from Rs 8,432 crore in the year-ago period and Rs 13,265 crore in the preceding July-September quarter.

Amid the controversy triggered by a slew of allegations against the Adani Group, the government-owned lender disclosed that its overall exposure to the Gauram Adani-led embattled conglomerate is Rs 27,000 crore and it does not see any difficulties in loan repayments.

For the quarter under review, the core net interest income rose 24.05 per cent to Rs 38,069 crore on the back of a 0.35 per cent expansion in the net interest margin to 3.50 per cent and 18.61 per cent growth in net advances.

Amid the 'war for deposits' in the system, the bank posted a slower deposit growth at over 8 per cent, and chairman Dinesh Khara said it has already activated multiple measures to push up the number.

He also added that it carries excess government securities holdings of over Rs 3 lakh crore, which can be deployed, and made it clear that it will not engage in a price war in such a way that it has to compromise on the NIMs.

The other income rose to Rs 11,468 crore for the reporting quarter against Rs 8,673 crore in the year-ago period. 

On the asset quality front, it reported a gross non-performing assets ratio of 3.14 per cent as against 4.50 per cent in the year-ago period and 3.52 per cent in the quarter-ago period. The fresh slippages came at Rs 3,098 crore against Rs 2,334 crore in the December 2022 quarter. 

With the reduction in the stock of NPAs  the overall dud assets came under Rs 1 lakh crore for the first time since 2016  the amount of money set aside as provisions also reduced, with the provisions for non-performing assets nearly halving to Rs 1,586 crore for the reporting quarter. 

Khara said the bank will strive to maintain the credit costs at the same level going forward as well.

There is a case for being bullish on the overall economy, Khara said expecting capital expenditure-related credit demand to come from infrastructure, roads, ports, iron and steel, white goods, tourism and hotels, aviation, commercial real estate, data centres, electric vehicle and renewables and batteries sectors. 

The bank's overall capital adequacy stood at 13.27 per cent as of December 31, with a core capital buffer at 9.27 per cent. Khara said if one adds the profits ploughed back, the capital levels become more comfortable, and it would go for a fundraise only if required. 

The SBI scrip gained 3.12 per cent to close at Rs 544.45 apiece on the BSE, as against a 1.52 per cent jump on the benchmark.