State Bank of India (SBI) reported first-quarter net profit inched up by 0.89% to ₹17,035 crore, from ₹16,884 crore in the year-earlier period, as a 70% increase in loan loss provision to ₹4,518 crore dampened profit

Net Interest Income (NII) at India’s biggest bank grew 5.7% year-on-year (YoY) to ₹41,125 crore during the quarter ended June 30, 2024.

Domestic net interest margin (NIM) fell 12 bps YoY to 3.35%.

The bank reported credit growth at 15.4% YoY, with domestic advances growing by 15.6.

The increase in domestic advances was driven by SME advances, which rose 19.9%, followed by agricultural advances, which grew by 17.1% YoY, SBI said in a filing.

Retail personal advances and corporate loans registered YoY growth of 13.6% and 15.92%, respectively, it added. The home loan portfolio grew 13.3% to ₹7,29,581 crore.

During the quarter, deposits in the bank grew 8.18% YoY.

The bank witnessed improvements in asset quality, with gross non performing assets (GNPAs) declining 7.78% to ₹84,226 crore, from ₹91,328 crore a year earlier. The GNPA ratio at 2.21% improved by 55 bps YoY.

Net NPA was also down by 6.27% to ₹21,555 crore, from ₹22,995 crore in the year-earlier period. The Net NPA ratio at 0.57%, improved by 14 bps, the bank said.

Slippage ratio for the quarter improved by 10 bps YoY and stood at 0.84%. Credit cost for Q1FY25 was 0.48% and Capital Adequacy Ratio (CAR) as at the end of Q1FY25 stood at 13.86%.

”SBI reported a lacklustre performance in Q1,” said Manish Chowdhury, Head of Research at StoxBox. “Although there was some improvement in asset quality with a decline in credit costs, we believe the bank needs to accelerate its business growth in the current high-interest environment and amid intense competition,” he added.

“With the capital adequacy ratio continuously declining, the bank expects its Return on Equity (RoE) to outpace credit growth, leading to Common Equity Tier 1 (CET1) accretion over the medium term. However, the bank has clearly stated that they are open to raising growth capital if required,” Mr. Chowdhury observed.

“We will closely monitor the management’s commentary regarding their future course of action. Additionally, the appointment of a new chairman, as Dinesh Khara’s term ends on August 28, will be a key factor to watch,” he added. 

Separately, SBI said its board had approved a plan to raise up to ₹25,000 crore in capital through the issue of rupee- and/or dollar-denominated Basel lll compliant Additional Tier 1 and Tier 2 Bonds, to lndian and/or overseas investors during FY25, subject to the approval of the Government of lndia.