The reason for the loss in net profit of SBI is more provisioning for stranded loans. However, the bank hopes that with the recovery in the economy, its balance sheet will be strengthened.
In the first quarter of the current financial year, the country’s largest bank SBI has recorded a big fall of seven percent in net profit. This decline in net profit is due to higher provisioning.
However, the bank expects that its credit growth will be in double digits in FY 2021-22. The bank’s net profit declined to Rs 5,196 crore in the third quarter of the current financial year. Net profit in the third quarter of FY 2019-20 was Rs 5196 crore.
Profit reduced due to high provisioning
The main reason for the decrease in net profit of the bank was the high provision for stranded loans. The bank’s profits have been affected due to this. The bank told the stock market that its total income declined to Rs 75,980.65 crore in the first quarter of the current financial year, from Rs 76,797.91 crore in the same period last year.
The bank said its net profit on an integrated basis declined 5.8 per cent to Rs 6,402.16 crore in the third quarter from Rs 6,797.25 crore in the year-ago period. The bank made a total provision of Rs 10342.39 crore during the quarter of which Rs 2290.38 crore was for NPA. Last year, the bank had provisioned Rs 7252.9 crore.
Decline in NPA
However, by December 31, 2020, the NPA came down to 4.77 per cent of the total advance. The bank’s NPA was 6.94 per cent in the year-ago period. In terms of value, the gross NPA was Rs 1,17,244.23 crore.
Similarly, net NPAs decreased to 1.23 per cent i.e. Rs 29,031.72 crore. State Bank Chairman Dinesh Khara said that the good news on the vaccination front has raised the hopes of recovery in the economy. Hence the bank expects double digit credit growth.
Nidhi Malviya is fun loving girl. She writes at NoobFeeds about various topics related to Finance, Technology, Business etc.