State Bank of India (SBI) reported its highest-ever quarterly profit despite a one-time loss of Rs 7,418.4 crore due to revision in the family pension payable to employees covered under the 11th bi-partite settlement.

The country’s largest lender posted  a 66.7% rise in the fiscal second quarter net profit to Rs 7,627 crore on the back of asset quality improvement and lower provisioning. In the year-ago quarter, the bank’s net profit stood at Rs 4,574 crore.

The bank provided for Rs 3,034 crore in the quarter ended September, which is 74.47% lower than the year-ago period. The recovery of Rs 4,149 crore from written off assets also helped in boosting the bank’s profits while fee income showed strong growth and core interest income remained stable.

“This is the highest quarterly profit that the bank has reported so far,” chairman SBI Dinesh Khara told the media in a call.

Net interest income (NII) rose 29% year-on-year to Rs 31,184 crore. Net interest margin (NIM) rose 16 basis points to 3.50%.

The bank’s asset quality improved with gross non-performing assets (NPAs) ratio being lower at Rs 4.90% (Rs 1,23,942 crore) in the September quarter compared to 5.32% (Rs 1,34,259 crore) a quarter ago. The gross NPA was the highest for retail loans, standing at Rs 63,114 crore and forming 4.51% of the total advances. This was followed by corporate loans, which had an outstanding gross NPA of Rs 57,697 crore and formed 7.62% of the bank’s gross advances. Agriculture outstanding gross NPAs stood at Rs 31,795 crore in the September quarter and constituted 14.79% of the advances.

The net NPA ratio stood at 1.52% versus 1.77% a quarter ago.

Fresh slippages in the quarter stood at Rs 4,176 crore compared to Rs 15,666 crore reported in the first quarter. Slippage ratio for the September quarter stood at 0.66%, falling from 2.47% in the June quarter. Provision coverage ratio (PCR) was at 87.66% while credit cost fell 51 basis points year-on-year to 0.43%.

The bank restructured Rs 30,312 crore of loans. Of this, Rs 17,317 crore of loans were restructured under the Reserve Bank of India’s Covid special restructuring window called 2.0 while Rs 12,995 crore came in the first round of restructuring.

The bank had recovery and upgradation of Rs 7,407 crore during the quarter. This included Rs 4,149 crore of recovery from its written off accounts. The bank had a recovery of Rs 4,000 crore from DHFL. Khara, however, did not reveal the bank’s total exposure to the beleaguered non-banking finance company. Srei Infrastructure, the bank said, was fully provided for.

The interest income grew 3.99% to Rs 69,481 crore. This was aided by growth in the low cost current accounts, which grew by 19.20% to Rs 2,52,763 crore while savings account grew by 10.55% to Rs 14,53,624 crore. The current account savings account (CASA) constituted 46.24% of the bank’s total deposits. 

The non-interest income fell 3.7% to Rs 8,207 crore from Rs 8,527 crore in the year-ago period.

The bank’s gross advances grew 6.17% year-on-year to Rs 25,30,777 crore, with advances in the bank’s foreign offices growing the strongest at Rs 16.18% to Rs 3,74,722 crore. This was followed by retail advances, which grew 15.17% year-on-year to Rs 9,04,473 crore. 

Meanwhile, domestic advances growth stood at 4.61% for the period under review. Home loan, the bank said, accounted for 24% of the bank’s domestic advances and grew 10.74% year-on-year..  

Corporate credit continued to slow, decelerating 3.91% to Rs 7,56,764 crore. Incidentally, this is the only segment to report a negative growth. Agricultural advances grew 1.92% to Rs 2,14,998 crore while the SME loan segment grew 0.93% to Rs 2,79,820 crore.

“Corporate growth has been the only challenge for us,” Khara said. “But the bank has unutilised credit limits of Rs 1.50 lakh crore as working capital advances and Rs 2.25 lakh crore of term loans, which will be drawn as the economic growth picks pace,” he added.