India’s largest nationalized bank, SBI reported a 6.9 percent slip in its net profit. The year-on-year decline in the standalone profit at Rs.5,196.22 crore for the quarter which ended in December 2020 from Rs.5,583.36 in the same period a year ago.

However, the net interest income (NII), the difference between interest earned and interest expended, grew by 3.7 percent to Rs.28.819.94 crore in quarter three of FY 21. The NII stood higher last Q3 due to the recovery in the Essar Steel account.

Dinesh Khara, SBI Chairman, said that total stressed assets will remain below Rs.60,000 crore this year as against Rs.41,000 crore as of December. He said that the bank aims to control its credit costs this year, well below the two percent guidance it had given previously, he said.

SBI’s gross non-performing assets (NPA) as a percentage of gross advances at 4.77 percent in December 2020 declined 51 bps sequentially and the net NPA at 1.23 percent fell 36 bps on quarter-on-quarter basis. The bank reported decline in NPA with bad loans from corporate book down 35 bps and retail 62 bps in all segments of loan books.

On proforma basis without reference to the Supreme Court interim order, the gross NPA would have been at 5.44 percent and net NPA at 1.81 percent in Q3 FY21.

In September last year, Supreme Court directed that the accounts which were not declared as NPA till August 2020 shall not be declared as NPA till further orders. However, the bank has not declared any domestic loan account as NPA which was standard as on August 2020.

Dinesh said the bank had seen some recoveries in sectors like textile, aviation and airports, hotels and tourism. “We are confident that once we reach near-normal, we should start seeing demand from corporate borrowers”.

SBI said that provisions and contingencies increased significantly by 42.6 percent year-on-year to Rs.10,342.39 crore in Q3 of FY21. The bank has proactively made an additional provision of Rs.6,247 crore as of December 2020 towards the possible impact of COVID pandemic.

“The bank’s management is not expecting any significant impact on the bank’s liquidity or profitability,” SBI said in a statement. It further added that credit growth stood at 6.73 percent, mainly driven by retail advances (15.47 percent), SME (5.62 percent) and corporate advances (2.23 percent). Including the YoY growth in corporate bonds and commercial papers of Rs.44,161 crore, the loan book has grown by 8.16 percent.

SBI’s total deposits grew at 13.64 percent on a year-on-year basis, out of which current account deposit grew by 11.33 percent, while saving bank deposits rose by 15.99 percent. The net interest margin remained stable at 3.12 percent sequentially, but contracted 21 bps year-on-year.

The fresh slippages were sharply lower at Rs.237 crore for the quarter ended December 2020, compared with Rs.3,085 crore in previous quarter, but proforma slippages for Q3FY21 were at Rs.2,073 crore and proforma slippages for nine months at Rs.16,461 crore.