SBI Q2 takeaways: Profit beats estimates, bad loan provision drops sharply

Net NPAs for the quarter stood at 1.59 per cent against 1.86 per cent in the June quarter and 2.79 per cent a year ago.

SBI Q2 profit beats Street estimates, rises 52% YoY to Rs 4,574 crore
NEW DELHI: SBI, the largest bank of the country by asset size, delivered an encouraging set of numbers, beating analysts' expectations, driven by lower provision and improvement in asset quality.

The company also managed to increase its interest income and total income. However, analysts pointed out that other income is also a substantial portion of its total income, a trend shown by other banks as well.

Here are key takeaways from earnings announcements:


Bottom line improves
SBI reported a 51.9 per cent year-on-year (YoY) rise in net profit for the quarter ended September at Rs 4,574.16 crore. The bank’s net interest income (NII) for the quarter rose 14.56 per cent to Rs 28,181 crore, while net interest margins (NIMs) came in at 3.34 per cent.

Asset quality gets better
The bank's gross NPAs came in at 5.28 per cent against 5.44 per cent in the preceding quarter and 7.19 per cent in the same quarter a year ago. Net NPAs for the quarter stood at 1.59 per cent, against 1.86 per cent in the June quarter and 2.79 per cent a year ago.
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CAR improves
The lender’s capital adequacy ratio stood at 14.72 per cent at the end of September, compared with 13.40 per cent at the end of June, and 13.59 per cent in corresponding quarter last year.

Provision comes down
The bank said it has made a provision of Rs 2,124 crore towards employee wage revision during the quarter and an additional provision of Rs 239 crore on Covid-related accounts. Provisions for NPA came down by nearly a half.

Analyst take
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“In fact, the headline numbers are fairly decent and as we have seen for many other banks also there is an improvement in GNPAs, reported GNPA and reported net NPA because as we know that a lot of accounts under moratorium are not classified as NPA. Just one observation is that there has been a good amount of improvement in the other income also there in this quarter which seems to have supported the bottom line,” said Siddharth Purohit, SMC Global Securities.
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