SBI Q2FY21 Results Analysis
State Bank of India (SBI) is the largest bank in India and recently declared its Q2FY21 results. Bank’s standalone net profit jumped 52% on YoY basis and 9% on QoQ basis. Let us do a results analysis of quarterly results of SBI Bank.
SBI Quarterly Performance Review
State Bank of India Q2FY21 Results
- Bank posted muted interest income growth of ~4% on YoY basis , however its interest expenses declined by 2.7% owing to lower interest rate.
- This has led to healthy growth in Net Interest Income(NII) of ~15% YoY and 5.8% QoQ.
- Non-Interest Income has remained flat over YoY, however Net total income grew at a healthy rate of ~11% on YoY and 6% on QoQ basis.
- As moratorium period has ended, COVID-19 related provisions have declined significantly by 87% on QoQ basis.
- This has led to total provisions and contingencies declining by 23% and 19% on YoY and QoQ basis respectively.
- However, the exact impact of moratorium on asset quality is still unknown and these provisions can increase going ahead.
- Reduced provisions has led to robust growth in PBT and hence in net profit on YoY basis.
Balance Sheet Summary
- SBI’s balance sheet has increased by 13% on YoY basis.
- Bank has decent growth in gross advances of 6% on YoY basis , whereas there is a strong deposits growth of ~14% YoY.
- Borrowings have reduced mainly due to increase in deposits and reserves have increased on YoY basis due to robust profitability.
Deposits Mix (%)
- Bank’s deposits – both timed and CASA (current and savings) have shown healthy growth.
- Bank’s current CASA and term deposit mix is 55:45
- Domestic retail personal loans have grown by ~15% YoY , however there is sluggishness in corporate and SME lending.
- Majority (~60%) of the retail personal loans are home loans, which are secured (mortgage backed loans).
- Overall advances mix for this quarter is as shown below:
- As seen here, retail personal and agri-loans have a major share in advances mix.
- Also from the overall 38% personal loan book , ~23% of the loan book accounts for home loans.
- As of Sept’20, Bank’s gross NPAs are at ~5.3% and Net NPAs at 1.6%.
- Bank is able to reduce its NPAs over the past few quarters.
- This has led to provision coverage ratio increasing to 88.2% in Sept’20.
- However, the actual impact of moratorium is yet to unfold and there is a possibility of surge in NPAs in upcoming quarters.
- Bank is able to increase its Net Interest Margin (NIM) despite continuously increasing cost to income ratio.
- Bank has strong CASA ratio at 45.4% and is increasing over the past few quarters.
- Capital Adequacy Ratio (CAR) of the bank is also strong at 14.72% as against the regulatory requirement of 9% for a PSU bank.