How SBI makes a profit in FY 2020

The nation’s biggest bank, State Bank of India (SBI) has registered its highest ever annual profit in the fiscal year 2019-20 on this Friday. The bank has collected a four-fold rise in the March quarter period profit which is at 3,581 crores as a one-time gain from the stakes sale in the field of subsidiaries and decline in bad loans of the country’s biggest lenders.

According to a regulatory filing, the bank has reported that it has gained a standalone profit after tax of Rs. 838 crore in the period Jan-March of 2018-19. The bank reported its highest ever annual profit achieved in 2019-20, it reported a yearly profit of Rs. 14,488 crore against just Rs 862 crore of the previous fiscal year.  In the year 2019-20, the bank has said that it included a profit of Rs. 4,484.30 crore in the second quarter on the sale of certain portions of the investment in subsidiary SBI Life Insurance in the second quarter and it gained a net profit of Rs. 2,731.34 crore on sale of some stakes in the Payment Services and SBI Cards in the March quarter. 

Bank’s chairman Rajnish Kumar told reporters that in these difficult circumstances of COVID-19 and even not so easy conditions before COVID-19, the bank is able to achieve great success and has declared a record profit of Rs. 14,488 crore in the Fiscal Year 2020 and this is the highest ever profit in the history of State Bank of India (SBI). He added the bank has consistently been able to improve the quality of its assets and also the provision coverage ratio after every quarter. RBI announced that around 21 per cent of the bank’s retail borrowers have availed the three-month moratorium.

Rajnish Kumar said that even after extending the moratorium to all their customers, the instalments paid figures were like, around 82 per cent customers have paid two or more than two instalments and around 92 per cent customers have paid one or more instalments during the period of March to May. He added that the bank has decided to extend the standstill benefits, in the terms of the classification of the assets the accounts with a pending loan of Rs 6,200 crore, so it has made a provision to aggregate 15 per cent which is Rs 938 crore in these loans. The domestic NIM (net interest margin) has stood at 2.94 per cent in the period of Jan-Mar of 2019-20. Previous year it was at 3.02 per cent in this period. There is some improvement in the NPAs as the ratio improved by 138 basis points and is down to 6.15 per cent from 7.53 per cent and the net NPA was recorded down by 76 basis points to 2.3 per cent from 3.01 per cent.

The PCR ( Previous Coverage Ratio)  had stood at 83.61 per cent. The bank has confirmed, the recoveries and up-gradation during this quarter have stood at Rs. 2,528 crores. Mr Kumar has said that it will be difficult and the recoveries will be affected in the June quarter but they are estimating improvement in it from September onwards.