SBI sees the largest net quarterly quarter of Rs 5,583cr in October-December
Mumbai: reported its highest quarterly net rate of Rs 5,583 million rupees, 41% more than the corresponding quarter of the previous year. Earnings were reinforced by a sharp jump in net interest income.
This was due in part to the recovery of Rs 11,000 million after the resolution of Essar's breach due to its sale to ArcelorMittal under the insolvency process.
The bank managed to increase its net interest income (NII) by 22% to Rs 22,779 million rupees despite the fact that the growth of loans was reduced to less than 7%. This was due to the fact that the bank was able to limit the increase in interest to less than 1% despite the fact that deposits grew by 10%.
“For the quarter, our net interest margin (NIM) was 3.59%. If we eliminate the impact of recovery, the NIM would be 3.37%. We are keeping the cost of deposits very well and transmitting the benefit to the borrower, this is how we have managed to maintain our NIM, said the president.
Kumar said that in the current quarter, the bank anticipated the recovery of a large steel company and a textile company. “In the future, it is now credit growth that is on my wish list. If there is credit growth, our NII will increase. If we can increase the credit to 12% instead of 7%, it will mean an additional credit growth of Rs 1.5 lakh crore, which will improve the NII by Rs 4,000-5,000 crore, he said. The results reported by the SBI were in line with estimates of healthy growth and asset quality. Single gain of Essar The sale of steel resolution was used for the provision of a housing finance company (DHFL), divergence and adjustment of deferred tax assets (DTA) for lower tax adoption, ”said ICICI Securities in a note.
According to Kumar, adjustments to the DTA were completed and, as of the next quarter, the bank would record the total benefit of the lowest tax rates.
“The results for the third quarter had several moving parts, but overall the performance was healthy. Management seemed confident and has had the full impact of the divergences of fiscal year 19, and has still published a healthy operating performance. We believe that SBI is on track to reduce asset stress, ”said Lalitabh Shrivastawa, deputy vice president of Sharekhan.
The earnings would have been greater had it not been for the provisions on DHFL, which was classified as NPA during the quarter. In addition to loans to DHFL, SBI had also purchased a set of home loans disbursed by the stressed housing finance company. Kumar said the bank had done a thorough due diligence before buying the loans. “We do a very thorough due diligence at the time of the group purchase. We will have a perspective in light of what the compliance management has said, ”said Kumar.