SBI Q2 net profit rises 14.3% to Rs 23,038 crore on one-time stake-sale gain

SBI's 3 November exchange filing put standalone net profit at Rs 23,038 crore for the quarter ended 30 September, against Rs 20,160 crore a year earlier. The quarter included a Rs 7,288 crore one-time gain from stake sales, including in SBI Funds Management, The Hindu BusinessLine reported. That was 59% larger than the Rs 4,593 crore SBI booked on the sale of its Yes Bank stake a year earlier.

Profit after tax adjusted for the stake sale was Rs 170 billion, 7% below Nomura's estimate, Moneycontrol reported. Nomura cut its target price to Rs 1,100. SBI shares rose about 1.5% on 4 November and were the top Nifty 50 gainer, Moneycontrol reported.

On a consolidated basis, profit rose 20% to Rs 25,361 crore from Rs 21,137 crore. First-half standalone profit was Rs 44,159 crore, up 12.31% from Rs 39,320 crore, HDFC Sky reported.

Margins widen as deposit costs fall

Net interest income rose 14.7% to Rs 49,143 crore from Rs 42,847 crore. Domestic net interest margin was 3.11%, up from 3.00% in the June quarter and 3.08% a year earlier, as the domestic cost of deposits fell to 4.84% in September from 5.04% in March, Businessworld reported. The whole-bank margin slipped to 2.94% from 2.96%.

Loan growth outpaces deposits

Interest income grew 10.46% to Rs 1,32,019 crore and interest expenses rose 8.09% to Rs 82,876 crore. Gross advances grew 17.84% to Rs 52.08 lakh crore. Deposits rose 12.27% to Rs 62.78 lakh crore, including $10.9 billion raised through FCNR(B) deposits; excluding those, growth was 10.5% to 10.6%, Chairman C S Setty said, The Hindu BusinessLine reported. The CASA ratio slipped to 38.32% from 39.63%, The News Mill reported. Total business stood at about Rs 115 lakh crore.

Treasury losses cut other income

Other income fell 24% to Rs 11,777 crore from Rs 15,463 crore, weighed down by treasury losses. Setty put mark-to-market and forex losses at close to Rs 1,300 crore, against Rs 2,900 crore a year earlier, The Hindu BusinessLine reported. Fee income rose 9.63% to Rs 9,549 crore, Businessworld reported.

Asset quality improves

The gross NPA ratio fell to 1.39% from 1.73% a year earlier and 1.47% in the June quarter. The net NPA ratio eased to 0.36% from 0.42%, and gross NPAs fell 4.87% to Rs 72,529 crore, The Hindu reported. Fresh slippages were Rs 5,227 crore, down from Rs 7,046 crore in the preceding quarter, and the slippage ratio was 0.50%, India Infoline reported.

Provisions and contingencies dropped to Rs 4,217 crore from Rs 5,400 crore. Loan-loss provisions fell 33.23% to Rs 2,759 crore and credit cost declined to 0.22% from 0.39%, Businessworld reported. The provision coverage ratio, excluding accounts written off, was 74.43%. The capital adequacy ratio rose to 16.09% from 14.62%, and the common equity tier-1 ratio was 13.34%, against 11.47% a year earlier.

Guidance and the ECL bill

SBI kept its FY27 guidance of 14-15% credit growth and 10-11% deposit growth, India Business Trade reported. Setty told a press conference the bank hopes to keep domestic net interest margin "above 3%" even if deposit rates rise, The Hindu reported. SBI said it would need to provide around Rs 19,500 crore for its transition to the expected credit loss system, India Business Trade reported. Managing Director Ashwini Kumar Tewari put the corporate loan pipeline at Rs 7.8 lakh crore.