SBI share price

SBI Q2 FY25 Results: Net Profit Surges, NII Growth Steady, and Asset Quality Improves

State Bank of India Ltd. (SBI), the largest lender in India, recently announced its financial performance for the quarter ending September 2024. In the month leading up to the announcement, SBI shares rose by 10%, approaching their all-time high.

SBI’s Strong Financial Performance in Q2 FY25

SBI reported a 5.4% year-over-year increase in Net Interest Income (NII), reaching ₹41,620 crore, close to the ₹41,639 crore projected by analysts in a CNBC-TV18 poll. The bank’s net profit for the period also showcased a significant 28% YoY growth, standing at ₹18,331.4 crore, surpassing market estimates of ₹15,426.5 crore.

Improved Asset Quality and Lower NPAs

SBI’s asset quality demonstrated improvement on a sequential basis. Gross Non-Performing Assets (NPA) declined to 2.13%, down from 2.21% in June, while Net NPA reduced to 0.53% from 0.57% in the previous quarter. Both metrics exceeded Motilal Oswal’s expectations of 2.16% for Gross NPA and 0.55% for Net NPA.

On an absolute basis, Gross NPA declined to ₹83,369 crore from ₹84,226 crore in June. Similarly, Net NPA improved to ₹20,294 crore, down from ₹21,555 crore in the prior quarter.

Provisions and Loan Growth

Provisions for the quarter increased to ₹4,506 crore, up from ₹3,449.4 crore in the June quarter and significantly higher than the ₹115 crore provisioned in the same period last year. The bank also reported a strong loan growth rate of 15% on a YoY basis, slightly below the 15.8% growth anticipated by Motilal Oswal.

Slippages and Recovery Trends

Gross slippages for the quarter reduced to ₹4,951 crore, a significant improvement from ₹8,707 crore in the June quarter. However, recovery and upgrades declined to ₹2,600 crore, down from ₹3,666 crore in June, reflecting a slower pace of asset resolution.

SBI Shares Reflect Positive Market Sentiment

Despite the positive earnings report, SBI shares were trading 1.8% lower at ₹844 post-announcement. The stock had previously risen by 10% in the past month in anticipation of the results, maintaining a strong market position.

Conclusion:

State Bank of India’s Q2 FY25 results highlight its continued growth trajectory with solid NII growth, substantial profit gains, and improved asset quality. With enhanced provisions and robust loan growth, SBI demonstrates resilience in a competitive lending environment, positioning itself as a stable force in the Indian banking sector.

FAQs:

1.What was SBI’s net profit for Q2 FY25?

A. SBI’s net profit for Q2 FY25 stood at ₹18,331.4 crore, marking a 28% increase year-on-year.

2.How much did SBI’s NII grow in Q2 FY25?

A. SBI’s Net Interest Income (NII) grew by 5.4% YoY to ₹41,620 crore.

3.What was SBI’s Gross NPA for Q2 FY25?

A. Gross NPA improved to 2.13% in Q2 FY25, down from 2.21% in the June quarter.

4.How did SBI’s stock perform ahead of the results announcement?

A. SBI shares rose by 10% in the month leading up to the earnings release.

5.What were the provisions for SBI in Q2 FY25?

A. Provisions for the quarter rose to ₹4,506 crore from ₹3,449.4 crore in the June quarter.

6.How much did SBI’s loan growth increase in Q2 FY25?

A. SBI reported a 15% YoY increase in loan growth for the September quarter.

7.What were the gross slippages for SBI in Q2 FY25?

A. Gross slippages declined to ₹4,951 crore, a notable decrease from the June quarter.

8.Did SBI’s asset quality improve in Q2 FY25?

A. Yes, SBI’s Gross and Net NPAs both improved on a sequential basis in Q2 FY25.

9.What was SBI’s market position post-earnings announcement?

A. Shares were trading close to all-time highs but saw a slight decline to ₹844 after results.

10.What factors drove SBI’s profit growth in Q2 FY25?

A. The growth was driven by steady NII, improved asset quality, and a strong focus on loan growth.

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