SBI Reports Significant Profit Surge in Q3FY25
The State Bank of India (SBI) has announced a remarkable financial performance for the third quarter of the fiscal year 2025 (Q3FY25). The bank reported an impressive 84.3% increase in net profit, reaching ₹16,891 crore compared to ₹9,164 crore in the same quarter of the previous year. This substantial growth can be attributed to the absence of a one-time provision for pension liabilities that impacted last year’s results and a reduction in operating expenses. The bank’s financial health appears robust, with improvements in asset quality and a strong digital presence.
Factors Behind the Profit Surge
SBI’s significant profit increase is primarily due to the absence of a hefty one-time provision for pension liabilities that amounted to ₹7,100 crore in Q3FY24. This provision was necessary after the bank’s central board decided to standardize pension rates for all retired employees. Previously, the rates varied between 40% and 50%, leading to a higher actuarial valuation of liabilities. In Q3FY25, the bank’s employee provisions dropped sharply by 61.5%, falling to ₹3,672 crore from ₹9,554 crore in the same quarter last year.
Additionally, the bank’s net interest income saw a modest growth of 4.1%, rising to ₹41,446 crore from ₹39,816 crore. However, the net interest margin experienced a slight decline of 21 basis points year-on-year, settling at 3.01% for the entire bank and 3.15% for domestic operations. This decrease is attributed to the rising costs of deposits, which have impacted overall profitability. Despite these challenges, SBI’s Chairman, CS Setty, expressed optimism about maintaining a consistent return on assets and equity in the future.
Operating Expenses and Provisions
SBI has successfully managed to reduce its operating expenses by 6.5%, bringing them down to ₹28,935 crore from ₹30,939 crore. This reduction reflects the bank’s commitment to cost control measures, which have become increasingly important in a competitive banking environment. However, total provisions increased by 63.5%, rising to ₹6,659 crore from ₹4,072 crore. This increase was driven by a 31.2% rise in loan loss provisions, indicating a cautious approach to potential credit risks.
The bank’s deposits grew by 9.8% year-on-year, reaching ₹52.3 lakh crore. This growth was primarily fueled by a 13.5% increase in term deposits and a 4.5% rise in current account and savings account (CASA) deposits. Advances also saw a healthy growth of 13.5%, totaling ₹40.7 lakh crore, with notable increases in both domestic and foreign office advances. These figures highlight SBI’s strong position in the market and its ability to attract and retain customers.
Asset Quality and Digital Transformation
SBI’s asset quality has shown significant improvement, with the gross non-performing asset (NPA) ratio declining to 2.07% and the net NPA ratio to 0.53%. The credit cost stood at a low 0.24%, reflecting the bank’s effective risk management strategies. The capital adequacy ratio remains healthy at 13.03%, ensuring that the bank is well-capitalized to support future growth.
In addition to its financial performance, SBI continues to push for digital transformation. Over 98% of transactions now occur through alternative channels, showcasing the bank’s commitment to modern banking solutions. The YONO app, SBI’s digital banking platform, has registered 8.45 crore users, with 64% of new savings accounts opened digitally. This digital focus not only enhances customer experience but also positions SBI as a leader in the evolving banking landscape.
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