SBI Reports 28% Surge in Q2 Net Profit, Enhanced Asset Quality Reflects Robust Performance

Mumbai (SBI), India’s largest public sector bank, announced a significant 28% increase in net profit for Q2 FY25, reaching Rs 18,331 crore for the quarter ending September 30, 2024. This sharp rise from last year’s Q2 profit of Rs 14,330 crore underscores SBI’s resilience and strategic growth across key financial metrics.

Growth in Interest Income and Net Interest Margins

SBI’s interest income saw an impressive on-year growth of 12.32%, totaling Rs 1.14 lakh crore in the July-September period. Meanwhile, net interest income (NII) climbed by 5.37% to reach Rs 41,620 crore, a slight increase from Rs 39,500 crore in Q2 FY24. While the bank’s net interest margin (NIM) decreased by 15 basis points on an annual basis, now at 3.14%, the sustained growth in interest income reflects SBI’s effective management of its financial resources amid a competitive banking landscape.

Improved Asset Quality: A Positive Outlook

SBI reported an improvement in asset quality, with the gross NPA ratio decreasing to 2.13% from 2.21% in the previous quarter, and a marked improvement from 2.55% in the same period last year. Additionally, net NPA ratio dropped to 0.53% from 0.57% in Q1 and 0.64% in Q2 FY24, showcasing the bank’s focus on maintaining strong asset quality. SBI’s provision coverage ratio also strengthened to 75.66%, underscoring its commitment to prudent risk management practices.

Strategic Moves and Increased Lending Activity

As part of its strategic efforts, SBI’s board approved plans to raise up to Rs 20,000 crore in long-term bonds through public or private placements within the fiscal year. The bank’s gross advances surged 14.93% year-on-year, amounting to Rs 39.21 lakh crore in Q2 FY25, driven by a robust domestic corporate loan book, which rose to Rs 11.57 lakh crore. SME credit grew by a strong 17.36%, reaching Rs 4.57 lakh crore, a sign of SBI’s growing influence in lending to small and medium-sized enterprises.

Expanding Deposits Amid Focus on CASA Growth

SBI’s total deposits reached Rs 51.17 lakh crore, marking a 9.13% growth over the previous year. The bank reported significant gains in current account deposits (up 10.05%) and term deposits (up 12.51%). Savings deposits stood at Rs 16.88 lakh crore, a steady rise from Rs 16.33 lakh crore in the same period last year. Chairman C.S. Setty highlighted SBI’s intention to increase the share of CASA deposits, which currently contributes to a 67.8% domestic credit-to-deposit ratio.

Stake Adjustments and Market Performance

In line with recent stake adjustments, SBI’s holding in SBI Cards and Payment Services Ltd reduced to 68.61%, and in SBI Life Insurance Co. Ltd to 55.39%. Additionally, its stake in Yes Bank Ltd declined to 23.98% following equity share allotments, and SBI disinvested 2% of its stake in The Clearing Corporation of India Ltd (CCIL).

Despite the stellar quarterly performance, SBI’s shares saw a slight dip of 1% at Rs 851.15 on November 8.