India's largest bank reports record profit as bad loan provisions plunge
BENGALURU, Aug 4 (Reuters) - State Bank of India, the country's largest lender by assets, reported a record quarterly profit that also beat analysts' expectations as bad loan provisions dropped sharply and fee income rose, sending its shares to a record 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, with bad loan provisions falling 46.6%.
Analysts on average had expected a profit of 61.09 billion rupees, according to Refinitiv IBES data.
The results come as many Indian banks struggle to contain bad loan additions, especially in the retail portfolio, as the second COVID-19 wave and resultant lockdowns hit economic activity, limited borrowers' ability to repay loans and affected collections.
Slippages, or the fresh addition of bad loans, at SBI also rose, jumping more than four-fold to 156.66 billion rupees. The bank, however, said it had recovered a significant amount of such loans in July.
Top private-sector lender HDFC Bank missed expectations for quarterly profit last month as it set aside more funds to cover for potential loan losses.
Non-interest income at SBI surged 24.3%, driven by a near 21% jump in fee income.
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.
Gross bad loan ratio at SBI, which had at the end of the March-quarter downplayed concerns around asset quality, ticked up to 5.32%, from 4.98% in the prior quarter.
SBI's shares rose as much as 4.7% to a record high of 467.45 rupees. They have outperformed the Nifty Bank index with a more than 60% jump this year.
($1 = 74.1800 Indian rupees) (Reporting by Chris Thomas in Bengaluru; Editing by Sriraj Kalluvila)
