Quarterly Results: SBI beats RIL to become most profitable company

Mumbai: State Bank of India has become the country's most profitable corporate with Rs 14,752 crore of consolidated net income in the second quarter of FY23, beating Reliance Industries having net earnings of Rs 13,656 crore.

On a standalone basis too, with Rs 13,256 crore of net profit, the nation's largest lender has beaten the Mukesh Ambani firm which remained the most profitable corporate for decades, by a wider margin as Reliance took a hit of Rs 4,039 crore in windfall tax on its exports during the quarter.

The net income of Reliance includes Rs 4,729 crore from Jio Platforms and Rs 4,404 crore from the retail business, both pre-tax earnings, which was marginally down from Rs 13,680 crore in the year-ago period.

On the other hand, SBI's standalone net soared 74 per cent to Rs 13,256 crore in the July-September quarter, making this the best-ever quarterly numbers for the bank and beating all other usually more profitable companies by a wider margin.

SBI chairman Dinesh Kumar Khara said had the bank booked treasury profits in the quarter, net income would have been much higher. He did not quantify by how much, though.

Unlike all other banks, the chairman said the bank has had notional gains on its treasury investments, which has a Rs 2.85-lakh-crore of additional exposure than the mandated 19 per cent in SLR or statutory liquidity ratio. The Reserve Bank mandates all banks to invest 19 per cent of their total deposits in central government securities.

SBI consolidated net soared 66 per cent during the period under review, which was only Rs 8,890 crore in the year-ago period. Total income of the SBI group also rose to Rs 1,14,782 crore in the quarter from Rs 1,01,143.26 crore in the year-ago period.

On a first half basis, however, Reliance continues to be the most profitable firm with Rs 31,611 crore in net as against SBI's Rs 22,077 crore. Similarly, on an income basis too, Reliance leads with total revenue of Rs 253,497 crore (traditionally Indian Oil and ONGC are the largest in terms of top-line), as against SBI's Rs 1,14,782 crore for the period under review.

When compared to others, especially SBI's peers, the most profitable and the second largest lender HDFC Bank is way behind with a net income of only Rs 11,125 crore, which rose 22.3 per cent in the quarter.

Traditionally the second most profitable company has been the software major TCS, which reported a Rs 10,431 crore net this time around on a revenue of Rs 55,309 crore.

The state-owned oil and gas major ONGC is yet to report its second quarter numbers but had its best-ever numbers of Rs 15,205.85 crore in the first quarter when the oil and gas prices were rocking and the same is unlikely to be repeated this quarter given the fall in crude prices.

SBI said it could post the best ever quarterly numbers of Rs 13,265 crore, which was up 74 per cent on-year for the September quarter as its all the key metrics performed robustly led by near record loan sales, higher interest income and lower provisions.

A 20-plus per cent loan sales had the lender's total income jumping to Rs 88,734 crore during the quarter from Rs 77,689.09 crore and the key net interest income rising 13 per cent to Rs 35,183 crore from Rs 31,184 crore.

The bank said of the total income, more than a fourth or Rs 24,400 crore came in from investment gains, though the bank has not booked profit from government securities in which it holds an additional exposure of over Rs 3.85 lakh crore, chairman Khara told reporters during the earnings conference at the bank's headquarters on Saturday.

As the bank nearly passed on the entire rate by the central bank to borrowers as well as depositors, its domestic net interest margin improved to 3.55 per cent from 3.50 per cent earlier.

The asset quality of the bank improved with the gross non-performing assets crashing by 138 basis points to 3.52 per cent from 4.90 per cent a year ago, while net NPAs nearly halved to 0.80 per cent of the advances from 1.52 per cent in the year-ago period. As a result, provisions for bad loans declined to Rs 2,011 crore from Rs 2,699 crore on-year, the chairman said.

In absolute terms, the gross NPAs declined by 13.83 per cent to Rs 1,06,804 crore and the net NPAs by 36.5 per cent to Rs 23,572 crore.

While the bank earned an interest income of Rs 79,860 crore, up 15 per cent, its interest expenses rose 16.6 per cent to Rs 44,676 crore. Of the total income, the key net interest income rose 12.83 per cent to Rs 35,183 crore as its net interest margin improved by 5 basis points to 3.55 per cent.

The bank's total advances rose 20 per cent in the quarter to Rs 30.35 lakh crore, of which the retail (personal) loans were at Rs 10.74 lakh crore, up 18.84 per cent, and retail home loans were up 14.57 per cent at Rs 5.94 lakh crore. Corporate loans grew at 21.2 per cent. SME and agri loans grew 13.24 per cent and 11 per cent, respectively.