BENGALURU / MUMBAI (Reuters) – The State Bank of India, the country’s largest lender by assets, on Wednesday announced stronger annual credit growth and surpassed quarterly profit estimates as economic activity sank speeds up after being hammered by one of the tightest locks in the world.
SBI ends strong quarterly earnings season for Indian banks as many benefited from lower bad debt provisions or increased interest income and highlighted improving retail demand during the holiday season.
The bank now expects credit growth of between 8% and 9% for the year, she said, from an earlier forecast of 8%. Personal loans increased 14.55% in the second quarter.
“Retail will remain our main driver of growth going forward,” said Dinesh Kumar Khara, who took over as SBI chair in October.
Khara said some recovery was also expected in the growth of business loans, although the segment remained lukewarm.
A 49% drop in bad debt provisions and an increase in net interest income pushed SBI’s net profit 52% to 45.74 billion rupees ($ 611.75 million) in the three months completed on September 30, beating analysts’ expectations of 33.33 billion rupees, according to Refinitiv Data.
The net interest margin increased 12 basis points to 3.34%, while the gross bad debt ratio fell to 5.28% from 5.44% in the June quarter after a directive from the Supreme Court in September that banks should not recognize non-performing assets until further orders.
While corporate slippages have fallen and are expected to remain lower in the second half of the year, new bad loan additions from the agribusiness and small and medium-sized segments have picked up, Khara said.
SBI stock, down 38% over the year, reversed course from an initial drop to close at 1.1%.
Reporting by Chris Thomas in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila