India’s largest bank posts record profit as bad debt provisions plunge


A man checks his cell phones outside the branch of the State Bank of India (SBI) in Kolkata, India on February 9, 2018. REUTERS / Rupak De Chowdhuri / File Photo

BENGALURU, Aug.4 (Reuters) – The State Bank of India (SBI.NS), the country’s largest lender in terms of assets, reported record quarterly profit that also exceeded analysts’ expectations as provisions for Bad debts fell sharply and commissions rose, sending its shares to an all time high.

Net profit rose 55% to 65.04 billion rupees ($ 876.79 million) in the first quarter ended June 30, the bank said on Wednesday, as provisions for bad debts fell 46.6%.

Analysts on average expected a profit of 61.09 billion rupees, according to data from Refinitiv IBES.

The findings come as many Indian banks struggle to contain bad debt additions, especially in the retail portfolio, as the second wave of COVID-19 and resulting lockdowns hit economic activity, limiting the ability of borrowers to repay loans and affect collections.

Slippages, or the new addition of bad loans, to the SBI also increased, more than four times to reach 156.66 billion rupees. The bank, however, said it recovered a significant amount of those loans in July.

Leading private sector lender HDFC Bank (HDBK.NS) missed quarterly earnings expectations last month as it set aside more funds to cover potential loan losses.

SBI’s non-interest income jumped 24.3%, led by an almost 21% increase in commission income.

The net interest margin, a key indicator of a bank’s profitability, stood at 3.15%, up 4 basis points from the fourth quarter of fiscal 2021.

The SBI’s gross bad debt ratio, which had minimized concerns about asset quality at the end of the March quarter, climbed to 5.32% from 4.98% in the previous quarter. Read more

SBI shares rose 4.7% to a record high of Rs 467.45. They outperformed the Nifty Bank Index (.NSEBANK) with a jump of over 60% this year.

($ 1 = 74.1800 Indian rupees)

Reporting by Chris Thomas in Bangalore; Editing by Sriraj Kalluvila

Our standards: Thomson Reuters Trust Principles.

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