State Bank of India (SBI), the country’s largest lender, posted a 10% year-on-year rise in consolidated net profit for the second quarter of FY2024-25, reaching Rs. 20,160 crore. The growth was primarily supported by strong loan disbursements, steady interest income, and lower provisioning for bad loans. While the bank maintained healthy asset quality, its net interest margin (NIM) saw mild compression amid rising funding costs. SBI’s management remains optimistic about sustaining growth momentum through the remainder of the fiscal year, bolstered by retail and corporate credit demand across key sectors of the economy.
Strong Financial Performance Amid Dynamic Market Conditions
SBI’s consolidated net profit for Q2 FY25 climbed to Rs. 20,160 crore, marking a solid 10% increase compared to Rs. 18,260 crore reported in the same quarter last year. On a standalone basis, the bank’s net profit stood at Rs. 17,870 crore, reflecting resilience in core banking operations despite a competitive interest rate environment.
Total income for the quarter surged by 13% to Rs. 1.28 lakh crore, supported by a rise in both interest and non-interest income. Net interest income (NII) rose moderately to Rs. 39,300 crore, driven by robust loan growth across retail, agriculture, and corporate segments.
However, the bank’s NIM — a key profitability indicator — eased slightly to 3.28% from 3.36% in the previous quarter, as deposit repricing led to higher funding costs. Despite this, SBI’s operating performance remained stable due to disciplined cost management and healthy credit offtake.
Asset Quality Remains Stable; Provisions Decline
SBI continued to demonstrate prudent risk management, reflected in the steady improvement of its asset quality metrics. The gross non-performing asset (GNPA) ratio declined to 2.36% from 2.65% a year ago, while the net NPA ratio fell to 0.57% from 0.64%.
Provisions for loan losses dropped significantly to Rs. 2,210 crore during the quarter, compared with Rs. 3,420 crore in the previous year. The provision coverage ratio remained robust at 91.6%, underscoring the bank’s strong financial buffers against potential credit risks.
The management attributed the improvement in asset quality to better recoveries, upgraded loan accounts, and stringent monitoring mechanisms across its large lending book.
Advances and Deposits Show Consistent Growth
Total advances grew by 14% year-on-year to Rs. 36.5 lakh crore, supported by strong momentum in retail and SME lending. The home loan segment, a key contributor to SBI’s portfolio, recorded double-digit growth, while corporate credit demand picked up due to increased capital expenditure in infrastructure and manufacturing sectors.
On the liabilities side, total deposits rose 10% to Rs. 48.9 lakh crore. Low-cost Current Account and Savings Account (CASA) deposits accounted for nearly 41% of total deposits, indicating the bank’s continued strength in mobilizing stable, granular funds despite competitive deposit rates across the industry.
Management Outlook: Confident About Sustained Growth
Chairman Dinesh Khara emphasized that SBI’s diversified loan book and sound balance sheet position the bank well for sustained profitability. He noted that the continued momentum in domestic credit growth, coupled with stable asset quality, provides confidence in maintaining strong financial performance through FY25.
The bank also plans to deepen its digital banking footprint under its “YONO 2.0” initiative, enhancing customer engagement through technology and data-driven insights. Additionally, SBI is exploring new lending opportunities in green finance and renewable energy, aligning with India’s broader sustainability goals.
Analyst Perspective: Cautious Optimism Amid Margin Pressure
Market analysts view SBI’s Q2 results as a reflection of solid fundamentals amid evolving macroeconomic conditions. While the lender’s earnings trajectory remains strong, analysts have cautioned that sustained margin pressure could persist in the coming quarters due to rising deposit competition and slower repricing of loan portfolios.
Nevertheless, SBI’s strong capital adequacy ratio of 14.4% and its proactive provisioning strategy provide ample room for growth and stability. Its diversified business mix — spanning retail, corporate, and digital banking — continues to give it a competitive edge in a rapidly consolidating financial landscape.
Conclusion: A Steady Performer in a Shifting Banking Landscape
SBI’s second-quarter results underscore the bank’s enduring strength and adaptability amid fluctuating market dynamics. With steady profit growth, improving asset quality, and a strategic focus on technology-driven expansion, the lender remains well-positioned to capitalize on India’s economic recovery and investment cycle.
As the banking sector navigates a complex environment of rate adjustments and regulatory changes, SBI’s performance serves as a barometer for the broader health of the financial system — reaffirming its status as a pillar of stability and growth in India’s banking ecosystem.
Comments