The country’s largest bank SBI posted 81% jump in standalone net profit to Rs 4,189.34 crore for the first quarter, aided by a decline in bad loan and sale of minority stake in its subsidiary SBI Life Insurance.
The bank had reported a net profit of Rs 2,312.02 crore in the April-June quarter of 2019-20.
The June quarter profit reflects Rs 1,539.73 crore earned out of sale of 2.1% stake in SBI Life Insurance Company, the bank said while announcing its first quarter numbers.
Consequently, holding of the public sector bank in SBI Life has come down to 55.60% from 57.70%.
Standalone total income increased to Rs 74,457.86 crore in the first quarter of 2020-21, from Rs 70,653.23 crore in the same period a year ago, SBI said in a regulatory filing.
Operating profit of the bank increased by 36% to Rs 18,061 crore, against Rs 13,246 crores in the April-June quarter previous fiscal.
Interest income of the bank rose to Rs 66,500 crore, compared to Rs 62,638 crore at the end of June 2019, registering a growth of 6%.
However, net interest margin of the bank declined to 3.01% as against 3.24% at the end of first quarter of last year.
Its gross non-performing assets (NPA) declined to 5.44% as of June-end, over 7.53% at June-end last year.
Similarly, net NPAs also declined to 1.8% in June 2020, compared to 3.07% a year ago.
As a result, the provision for bad loans declined to Rs 9,420.46 crore from Rs 11,648.45 crore in the year-ago period.
During the quarter, the bank has made an additional provision of Rs 1,836 crore on account of COVID-19 related accounts, it said.
This additional provision made by the bank is more than requirement as per the RBl guideline dated April 17, 2020.
Provision Coverage Ratio as on June 30, 2020 stood at 86.32%. Capital Adequacy Ratio (CAR) has improved to 13.40% as on June 2020.
On a consolidated basis, SBI net profit rose by 62% to Rs 4,776.50 crore as against Rs 2,950.50 crore in the same quarter a year ago.
At the same time, total income increased Rs 87,984.33 crore as compared to Rs 83,274.04 crore in the first quarter previous fiscal.
During the quarter, the credit growth was 6.58% “mainly driven by Retail (Personal) Advances (12.85% year-on-year) and Foreign Office Advances (11.19% y-o-y),” it said.
Observing that the spread of COVID-19 across the globe has resulted in decline in economic activity and increase in volatility in financial markets, the bank said it is gearing itself on all fronts to meet the same even though the challenges continue to unfold.
“The situation continues to be uncertain and the bank is evaluating the situation on an ongoing basis. Major challenges for the bank would arise from extended working capital cycle and waning cash flows,” it said.
Despite these conditions, there would not be any significant impact on the liquidity and profitability of the bank, it added.