SBI Q4 profit up 18% to record level on non-core income growth

New Delhi: State Bank of India (SBI) on Thursday reported 18 percent growth in consolidated net profit at Rs 21,384.15 crore, driven primarily by non-interest income.

On a standalone basis, the state-owned lender's profit grew to Rs 20,698.35 crore from Rs 16,694.51 crore in the year-ago period.

Consolidated profit for fiscal year 2023-24 was up 20.55 percent to Rs 67,084.67 crore as against Rs 55,648.17 crore in FY'23.

Chairman Dinesh Kumar Khara said both the quarterly and yearly profits are all-time highs for the over two-century old lender.

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In Q4, core net interest income grew by only 3.13 percent to Rs 41,655 crore, on the back of over 15 percent growth in advances but a 0.08 percent decline in net interest margin.

Khara told reporters that he expects a credit growth of 15-16 percent in FY25, and will be looking to sustain net interest margin at the current level, wherein the domestic NIM is 3.46 percent.

Deposits grew at 11.13 percent in FY'24, and Khara said the bank is aiming to take it to 13 percent in FY'25.

Non-interest income grew 24.41 percent to Rs 17,369 crore, providing the maximum support for the overall profit growth. The bank said profit or revaluations on investments nearly doubled to Rs 3,463 crore, while the miscellaneous income shot up by 62 percent to Rs 4,957 crore, aiding the overall other income line.

The loan growth was across all streams, including corporate, agriculture, retail and small businesses, Khara said, adding that the aim will be to sustain the same in the new fiscal as well.

There was an over 20 percent reduction in the telecom portfolio even though the corporate loan book grew at 16 percent, and Khara said it will be taking entity-specific calls in the sector.

The bank has a corporate loan pipeline of Rs 4 lakh crore, with over three-fourths of it from the private sector and the rest being state-led, Khara said, adding that the draw-downs are going up and the demand for term loans signalling private capex is also up.

To a question on the RBI proposals on higher provisions for under-construction projects, Khara said the incremental provisions required, even if one were to go with RBI proposals, will not impact SBI. It has not had any slippages from its project loan exposure in FY24, he added.

A transition to the expected credit loss (ECL) system will require Rs 30,000 crore of provisions in up to five years, Khara said, adding that the bank is sitting on non-NPA provisions of over Rs 35,000 crore at present.

The overall provisions declined to Rs 7,927 crore for the March quarter from Rs 8,049 crore in the year-ago period, Khara said, adding that there will not be any jolts from pension liabilities or wage hikes in the future.

The overall slippages increased to Rs 3,867 crore in March quarter as against Rs 3,185 crore in the year-ago period, but were down from the Rs 4,960 crore in the preceding December quarter.

There was an improvement in gross non-performing assets ratio to 2.24 percent as on March 31, 2024, as against 2.78 percent in the year-ago period and 2.42 percent at the end of December quarter. Khara said the bank expects to continue with the same trend on asset quality.

On the technology front, Khara refused to share the exact level of spends incurred by the bank but added that it has been undertaking all expenses to keep up with requirements.

To a question on the number of overall employees reducing by 27,000 over the last four years, Khara hinted at gains out of automation, saying the bank has been traditionally hiring 75 percent of the retiring staff and has also been investing significantly in technology and artificial intelligence tools.

It has also been hiring tech talent from the market to get the right skills, he said, adding that 85 percent of the nearly 12,000 probationary officers and associates are engineering graduates, who can be deployed into various tech function as well.

The bank's overall capital adequacy stood at 14.28 percent as on March 31, with the core CET 1 ratio at 10.36 percent. Khara said it has sufficient capital to take care of a 20 percent credit growth in FY25, but added that it may well look at equity raising in the new fiscal year if need arises. There will be a sizeable quantity of AT-1 bond sales, he added.

The bank has a gold loan book of Rs 1.38 lakh crore and does not see any challenge on it going forward, he said.

An official said the bank added 139 branches to take the overall network size to 22,542 in FY24, and aims to add another 300 branches in FY25.

The bank scrip closed 1.14 percent up at Rs 819.65 on the BSE as against a 1.45 percent correction on the benchmark.

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