SBI's annual profit tops Rs 50,000 crore

Mumbai: State Bank of India (SBI) reported record net profit in the quarter ended March 2023 led by strong loan demand and falling provisions as the bank's asset quality improved to the best in at least three years.

Net profit increased 83% to ₹16,695 crore in the quarter ended March 2023 from ₹9,114 crore a year ago. It crossed the ₹50,000-crore mark for FY23, the first time annual profit for any bank in India crossed that level.

Chairman Dinesh Khara said favourable macroeconomic conditions like healthy bank credit growth and moderating commodity prices will help SBI maintain the momentum in the current fiscal year.

"This has been a record year in terms of profits. Next year, we expect credit growth to be 12% to 14%. We have ₹4 lakh crore of excess SLR so (want of) deposits is not a factor in loan growth. We have a pipeline of ₹1.5 lakh crore of corporate loans and another ₹1.80 lakh crore of sanctions waiting to be disbursed," Khara said.

The bank's credit growth increased 16% led by a 20% growth in loans from foreign offices and 18% growth each in retail and SME advances. Corporate loans grew 13% year-on-year. Strong loan growth was reflected in a solid 29% growth in net interest income (NII), which increased to ₹40,393 crore.

Loan growth was supported by expansion in net interest margins (NIMs), which improved 44 basis points to 3.84% in March 2023.

The strong revenue growth helped make up for the 27% rise in operating expenses, which included higher provisions for wage revisions effective from November 2022, technology, mobile banking and deposit insurance premium related expenses.

Asset quality continued to improve as gross NPA ratio at 2.78% fell to the lowest in a decade. Khara said the bank is confident of maintaining its asset quality.

"Our efforts will be to maintain this current trend. We have significantly improved our underwriting standards, oversights and follow-ups even in SME loans, which is now part of our DNA," Khara said.

The fall in NPAs resulted in total provisions halving to ₹3,316 crore in March 2023, contributing to profit.

Khara said the bank is well equipped to deal with any impact on its balance sheet if the RBI implements expected credit loss-based provisions.

Besides retail growth, Khara said the bank also expects demand from renewable sectors like solar power, EVs and infra sectors like roads, ports and aviation for a 10% to 12% corporate loan growth this fiscal.