The State Bank of India reported on Saturday a rise in net profit of 21.1% year-on-year (Y-o-Y) to 1469 crore rupees in the second quarter of the financial year 27. This figure is higher than 1213 crore rupees the previous year, and the growth was driven by a strong increase in Net Interest Income (NII), despite higher reserves and lower treasury income.
In terms of sequential growth, net profit increased by 10.95% compared to 1324 crore rupees in the previous quarter. For the first half of the financial year 27, the bank recorded a net profit growth of 17.25%, reaching 2793 crore rupees compared to 2382 crore rupees the previous year.
The bank's Net Interest Income (NII) grew by 26.3% year-on-year, amounting to 4146 crore rupees compared to 3283 crore rupees in the same quarter last year. Sequentially, NII increased by 5.9% compared to 3914 crore rupees in the first quarter of financial year 27.
Interest income increased by 18.45% year-on-year, reaching 10357 crore rupees, supported by a 27.6% growth in interest income on issued loans to 7231 crore rupees. Meanwhile, interest expenses rose by 13.7% to 6211 crore rupees.
Net Interest Margin (NIM) improved to 3.01% from 2.89% the previous year. Deposit costs decreased by 28 basis points (bps) to 4.60%, which offset a 49 bps drop in loan yield to 7.87%.
Operating profit increased by 26.99% year-on-year, reaching 2268 crore rupees compared to 1786 crore rupees, as higher NII compensated for a decline in non-interest income. Sequentially, operating profit grew by 3.75% from 2186 crore rupees.
Non-interest income fell by 6.06% year-on-year to 1380 crore rupees, with treasury income dropping by 31.2% to 128 crore rupees from 186 crore rupees the previous year. Profit from investment sales decreased by 30% to 133 crore rupees, while the bank recorded a loss of 87 crore rupees on investment revaluation, compared to a loss of 51 crore rupees the previous year.
Provisions for written-off accounts and other receipts decreased by 8.2% to 617 crore rupees, while fee-based income rose by 3.9% to 635 crore rupees.
Reserves and contingencies, including income tax, increased by 39.4% year-on-year, reaching 799 crore rupees compared to 573 crore rupees the previous year. However, they decreased sequentially by 7.3% from 862 crore rupees.
Non-Performing Assets (NPA) reserves rose to 490 crore rupees from 143 crore rupees the previous year, and standard asset reserves increased to 379 crore rupees from 30 crore rupees. This was partially offset by the recovery of 336 crore rupees on investments, including promissory notes. The tax reserve decreased to 236 crore rupees from 259 crore rupees.
Operating expenses increased by 9.8% year-on-year, reaching 3258 crore rupees, with personnel costs rising by 9.5% to 2072 crore rupees, and other operating expenses increasing by 10.5% to 1186 crore rupees. The cost-to-income ratio improved to 58.95% from 62.42% the previous year.
Regarding asset quality, the bank's gross NPA ratio improved to 2.39% as of September, compared to 2.60% in June and 3.01% the previous year. The net NPA ratio decreased to 0.31% from 0.49% in the previous quarter and 0.48% the previous year. Absolutely, gross NPAs amounted to 9109 crore rupees as of September 30, compared to 8827 crore rupees the previous year and 9225 crore rupees in June. Net NPAs decreased to 1146 crore rupees from 1364 crore rupees in the corresponding period last year.
The provisioning coverage ratio improved to 97.16% from 95.86% in June and 96.88% the previous year. New write-offs decreased to 734 crore rupees during the quarter compared to 939 crore rupees in the first quarter of financial year 27. The write-off ratio was 0.24% on an annual basis, which is 6 bps lower year-on-year. Nevertheless, the annual loan cost increased by 32 bps year-on-year to 0.53%.
In the business segment, global loans grew by 29.83% year-on-year to 3.81 trillion rupees, while global deposits increased by 14.41% to 5.09 trillion rupees. Total global business grew by 20.54% to 8.90 trillion rupees.
Corporate loans increased by 42.05% to 1.19 trillion rupees, and retail, agriculture, and MSME loans grew by 21.11% to 2.54 trillion rupees. Retail loans grew by 24.49%, with housing loans increasing by 13.07% and auto loans by 13.09%.
The Current Account Savings Account (CASA) ratio decreased by 218 bps to 44.65%, while the lending to deposit ratio increased to 75.02% from 66.20% the previous year.
The bank's capital adequacy ratio stood at 17.68% as of the end of September, compared to 17.34% the previous year and 18.28% in June. The Tier 1 capital ratio improved to 15.97% from 14.98% the previous year.