MUMBAI: Strong loan demand helped State Bank of India (SBI), the country’s largest lender, beat estimates with US$2bil in April-June profits, but it also witnessed its provisions for loan losses rise sharply.
The state-run bank reported last Saturday its net profit rose around 1% for the first financial quarter to 170.35 billion rupees or about US$2.03bil from 168.84 billion rupees for the same period last year.
That was above analysts’ forecasts averaging 167.17 billion rupees, according to LSEG estimates.
SBI’s loans grew 15.39%, led by strong demand for retail loans, while deposits grew 8.18%. But loan-loss provisions, or funds set aside for potential bad loans, jumped 70% year-on-year (y-o-y) to 45.18 billion rupees.
Growth in SBI’s loan book, given its massive size, is seen as an indicator of broader economic trends in the country. Indian banks have reported strong loan growth over the past few quarters, boosted by consumer spending amid economic growth.
Net interest income, the difference between interest earned and paid, grew 5.7%. Net interest margins shrank 12 basis points y-o-y and quarter-on-quarter to 3.35%. — Reuters
