State Bank of India (SBI) reported its highest quarterly net profit, seeing a 55% surge in the June quarter to rest at Rs 6,504 crore on the back of lower provisions, higher fee incomes and one-time recovery from the Kingfisher Airlines loan account.

In the year-ago period, the country’s largest lender had reported a net profit of Rs 4,189.34 crore.

SBI recovered Rs 1,692 crore from the Kingfisher Airlines account through the sale of pledged shares.

The lender’s net interest income (NII), or the difference between interest earned and interest expended, rose 3.74% year-on-year to Rs 27,638 crore in the fiscal first quarter ended June. The NII stood at Rs 26,641 crore in the year-ago quarter.

Domestic net interest margin (NIM) for Q1FY22 came at 3.15%, down by 9 bps YoY. Non-interest income rose 24.28% to Rs 11,803 crore.

SBI’s credit growth rose 5.8% YoY to Rs 25.24 lakh crore on the back of retail (personal) advances (16.4%), agri advances (2.48%) and SME (2.01%). Home loan, which constitutes 23% of the bank’s domestic advances, rose 10.98% to Rs 5.05 lakh crore.

Total deposits grew 8.82% YoY during Q1FY22. Current account deposits surged 11.75 % while savings bank deposits rose 10.55% in the quarter under review.

On the asset quality front, the gross non-performing assets (NPA) stood at 5.32% as against 4.98% in the preceding quarter. Net NPA ratio stood at 1.77% as against 1.50% in the previous quarter.

Fresh slippages jumped more than four-fold to Rs 15,666 crore. This included Rs 5,268 crore of retail loans and Rs 6,416 crore from small and medium enterprises (SME). The stress list for loans between 30 and 90 days stood at Rs 11,303 crore. SBI has already pulled back Rs 4,700 crore from its fresh slippages in July.

SBI received restructuring requests to the tune of Rs 7,300 crore, of which it approved recasts worth Rs 5,246 crore. SBI chairman Dinesh Khara said the bank would be able to control slippages within 2% of the total loan book.

“We have slippages coming from SMEs and the home loan segments. But the bank has seen decent recoveries from home loans and personal loans. The SME sector is a little stickier, and we see better traction for debt restructuring from this sector,” he said.

Despite slippages coming in from home loans, SBI will not slow down in this segment. “When it comes to home loans, the market potential is huge, and there is no reason for us to slow down. We have mastered how to ensure right appraisals and timely distribution and would like to continue doing well,” Khara told reporters.

Provisions for NPA were at Rs 5,029.8 crore versus Rs 9,914.2 crore a quarter ago and Rs 9,420 crore YoY.

The slippage ratio stood at 2.47% for Q1FY22 compared to 0.60% a year ago. Credit cost at the end of Q1FY22 fell 77 bps YoY to 0.79%.