State Bank of India (SBI), the country’s largest lender by assets, said on Wednesday profit jumped 52% in the second quarter as bad loan provisions fell, with retail credit growth returning to pre-pandemic levels as economic activity picks up.
SBI’s results underscore a recovery in consumer demand during India’s festive season as the bank’s retail loans grew more than 14.5%, although regulatory measures aimed at helping borrowers - including a one-time loan restructuring - are likely to slow the banking sector’s recovery.
Several public sector banks as well as their private rivals in the country have seen profits increase as bad loan provisions dropped or interest income rose.
Sanctions and disbursements for SBI during the second quarter were significantly higher than last year across most retail products, the bank said in a statement. Home loans, which constitute 23% of domestic advances, grew 10.34%.
“SBI’s operating performance has come above expectations, driven by lower cost of deposits,” said Rajiv Mehta, executive vice-president at brokerage Yes Securities.
“The numbers also show that SBI was able to gain market share across key product areas of home loans, auto loans and personal loans,” he said.
{{/usCountry}}“The numbers also show that SBI was able to gain market share across key product areas of home loans, auto loans and personal loans,” he said.
{{/usCountry}}Net profit rose to 45.74 billion rupees ($611.75 million) for the three months ended Sept. 30, from 30.12 billion rupees a year earlier, beating analysts’ expectations of 33.33 billion rupees.
Gross bad loans as a percentage of total loans eased to 5.28% from 5.44% in the June quarter, after a top court directive that banks should not recognize non-performing assets until further orders.
Net interest margin rose 12 basis points to 3.34%, while provisions for bad loans slid 50%.
($1 = 74.7690 Indian rupees)
(Reporting by Chris Thomas in Bengaluru; Editing by Devika Syamnath)