State Bank of India reports record profit growth driven by non-interest income
State Bank of India (SBI) has announced an impressive 18 percent growth in its consolidated net profit, reaching Rs 21,384.15 crore. This significant increase was primarily fueled by non-interest income.
On a standalone basis, the state-owned lender saw its profit surge to Rs 20,698.35 crore from Rs 16,694.51 crore in the previous year.
For the fiscal year 2023-24, SBI’s consolidated profit increased by 20.55 percent, totaling Rs 67,084.67 crore compared to Rs 55,648.17 crore in FY’23.
Chairman Dinesh Kumar Khara expressed his satisfaction, noting that both the quarterly and yearly profits represent all-time highs for the bank, which has a history spanning over two centuries.
In Q4, core net interest income experienced modest growth of 3.13 percent, amounting to Rs 41,655 crore. This growth was supported by a 15 percent increase in advances, despite a slight 0.08 percent decline in net interest margin.
Khara informed reporters that the bank is aiming for a credit growth of 15-16 percent in FY25, and is committed to maintaining the net interest margin at the current level, which stands at 3.46 percent for the domestic sector.
Deposits grew by 11.13 percent in FY’24, and Khara stated that the bank is targeting a 13 percent growth in deposits for FY’25.
Non-interest income recorded a substantial growth of 24.41 percent, amounting to Rs 17,369 crore, providing significant support to the overall profit growth. The bank highlighted that profit from revaluations on investments nearly doubled to Rs 3,463 crore, while miscellaneous income surged by 62 percent to Rs 4,957 crore, contributing to the overall increase in other income.
Khara noted that the loan growth was strong across all sectors, including corporate, agriculture, retail, and small businesses, and emphasized the bank’s commitment to sustaining this growth in the new fiscal year.
Despite a reduction of over 20 percent in the telecom portfolio, the corporate loan book expanded by 16 percent. Khara mentioned that the bank will be making entity-specific decisions in the telecom sector.
SBI currently has a corporate loan pipeline of Rs 4 lakh crore, with more than three-fourths of it from the private sector and the remainder from the state-led sector. Khara highlighted that draw-downs are increasing, and there is a rise in demand for term loans, indicating an uptick in private capex.
Responding to a question regarding the RBI’s proposals on higher provisions for under-construction projects, Khara stated that even if the bank were to comply with the RBI’s proposals, the incremental provisions required would not impact SBI. He added that SBI did not experience any slippages from its project loan exposure in FY24.
Khara also mentioned that the transition to the expected credit loss (ECL) system would require Rs 30,000 crore of provisions over up to five years. However, he reassured that the bank currently holds non-NPA provisions of over Rs 35,000 crore.
The bank’s overall provisions decreased to Rs 7,927 crore for the March quarter from Rs 8,049 crore in the year-ago period. Khara affirmed that there would be no surprises from pension liabilities or wage hikes in the future.
Although the overall slippages increased to Rs 3,867 crore in the March quarter compared to Rs 3,185 crore in the year-ago period, they were down from Rs 4,960 crore in the preceding December quarter.
