New Delhi: The country’s largest bank SBI announced on Friday that its independent net profit in the first quarter jumped 81% to 4,189.34 crore, thanks to the reduction of non-performing loans and the sale of a minority stake in its subsidiary SBI Life Insurance.
The bank reported that its net profit for the April-June 2019-20 quarter was Rs 23,102.02 crore.
The bank said in its first quarter earnings report that the quarterly profit for the quarter reflected Rs 1,539.73 crore from the sale of a 2.1% stake in SBI Life Insurance.
As a result, the share of public sector banks held in SBI Life fell from 57.70% to 55.60%.
SBI stated in a regulatory document that the total independent revenue increased from Rs 70,653.23 crore in the first quarter of 2020 to Rs 74,457.86 crore in the first quarter of 2020-21.
The bank’s operating profit increased by 36% to 180.06 billion rupees, compared to 13246 billion rupees for the quarter from April to June of the previous fiscal year.
The bank’s interest income increased to Rs 66,500 crore, an increase of 6% compared to Rs 62,638 crore at the end of June 2019.
However, the bank’s net interest margin dropped to 3.01% from 3.24% at the end of the first quarter of last year.
As of the end of June, its total non-performing assets (NPA) fell to 5.44%, higher than the 7.53% at the end of June last year.
Similarly, net NPAs have dropped from 3.07% a year ago to 1.8% in June 2020.
As a result, the non-performing loan reserve fell to Rs 9,420.46 crore from Rs 11,648.45 crore in the same period last year.
It said that during the quarter, the bank made an additional provision of 18.36 billion rupees for accounts related to COVID-19.
The bank’s additional reserves exceed the requirements of the RB1 standard on April 17, 2020.
The provision coverage ratio as of June 30, 2020 was 86.32%. As of June 2020, the capital adequacy ratio (CAR) has increased to 13.40%.
Taken together, SBI’s net profit increased by 62% to Rs 4,776.50 crore, compared to Rs 2,950.50 crore in the same period last year.
At the same time, total revenue increased by Rs 87,984.33 crore from Rs 83,274.04 crore in the first quarter of the previous fiscal year.
According to the report, the credit growth in the quarter was 6.58%, “mainly driven by retail (personal) advances (12.85% year-on-year growth) and advances from the Ministry of Foreign Affairs (11.19% year-on-year growth).”
The bank has observed that the global spread of COVID-19 has led to reduced economic activity and increased financial market turmoil. The bank said that although the challenges continue, it is doing all they can to address them.
It said: “The situation is still uncertain and the bank is continuously evaluating the situation. The main challenges the bank will face will come from an extended working capital cycle and a reduction in cash flow.”
It added that despite these conditions, it will not have any significant impact on the bank’s liquidity and profitability.