State Bank of India (SBI) has reported its highest ever net profit of Rs 20,698 crore in the fourth quarter, making it the largest quarterly profit ever achieved by any Indian bank. This figure exceeded analyst expectations, which were around Rs 14,000 crore. The state-owned lender saw a 24% increase in profit compared to the year-ago period, surpassing both Reliance Industries and HDFC Bank in terms of profitability.
For the full financial year 2023-24, SBI’s net profit reached Rs 61,077 crore, marking a 22% growth compared to the previous year. This growth includes factors such as wage settlement and a one-time exceptional item of Rs 7,100 crore. The bank’s performance has proved resilient, considering the challenges posed by the global pandemic and associated economic difficulties.
Following the announcement, SBI’s shares closed at Rs 820, registering a 1% gain despite a significant decline in the sensex. This gain further bolstered SBI’s market capitalization, which now stands at Rs 7.3 lakh crore. However, it remains behind ICICI Bank and HDFC Bank in terms of market capitalization.
SBI has declared a dividend of Rs 13.7 per share, demonstrating its commitment to providing returns to its shareholders. The bank’s solid financial performance can be attributed to various factors. The net interest margin exceeded expectations, supported by strong fee income and higher treasury gains. Operating expenses were lowered due to reduced provisions for wage settlements. Credit costs remained low, and asset quality improved quarter-on-quarter owing to reduced slippages and increased recoveries/write-offs.
One key contributing factor to SBI’s improved margins was the faster credit growth compared to deposit growth during the quarter. As of the end of March 2024, SBI’s deposits stood at Rs 47.6 lakh crore, representing an 11.1% increase from the previous year. Advances grew by 15.2% to Rs 37.7 lakh crore. SBI chairman Dinesh Khara expressed optimism for the future and announced that the bank aims to maintain credit growth at 14-16% and deposit growth at around 13% during the current fiscal year.
Khara highlighted various sectors that have shown credit demand, including infrastructure, semiconductors, electric vehicles, renewables, and hydrogen, in addition to the traditional core sectors of iron, steel, and cement. He also mentioned that the working capital utilization has significantly reduced and there is a pipeline of Rs 4 lakh crore that is either sanctioned or in the process of being sanctioned.
Overall, SBI’s exceptional performance in the fourth quarter and the full financial year 2023-24 demonstrates its resilience and ability to adapt to challenging economic conditions. With a strong focus on credit growth and a favorable market response, SBI is well-positioned to continue its growth trajectory and provide value to its shareholders.
