Loans to individuals increased by 15% over one year, driven by an 11.49% growth in mortgage loans. Retail lending crossed the ₹10 billion mark for the bank during the quarter. Retail loans now make up the largest portion of the loan portfolio from ₹28.18 lakh-crore to 23%.
Chairman Dinesh Kumar Khara said the bank was also seeing a recovery in business lending, with the momentum expected to continue due to large unused credit approvals.
“We have around ₹4,000,000,000 in unused working capital loans and around 20% of our term loan facilities (is) also unused,” he said. “We launched a new segment of factoring services, which also saw growth in the quarter.”
The bank’s overseas advances rose 15% on a 16% growth in loans to Indian companies abroad and a 15% growth in trade finance, even as it recorded a decline in external commercial borrowing (ECB). The bank has started offering factoring services in markets like the US and UK to support Indian exporters in these markets. The overall growth in advances to businesses was only 6%, lower than the 11% growth in total advances.
Khara said the bank was on track to meet its return on equity (RoE) target of 15% by fiscal 2024 after a year-over-year jump of 398 basis points at 13.92% at the end of March. One basis point is 0.01 percentage point.
A drop in provisions also helped the bank improve its finances. Total provisions fell 35% to ₹7,237 crore in the quarter ended March, from ₹11,051 crore a year ago. Asset quality has improved, with net non-performing assets (NPA) falling to 1.02% from 1.50% a year ago.
Khara said the bank does not expect any shocks to asset quality, even post-Covid restructured loans are doing well.
“Our total restructured portfolio stands at ₹30,960 crore, or approximately 1.1% of our loan portfolio. Our balance sheet is fully insulated from any stresses,” he said. The bank’s provision coverage ratio improved to 75% from 71% a year ago.
SBI’s operational performance was below street estimates, but healthy loan portfolio growth and sustained improvement in asset quality were positive surprises, said Binod Modi, portfolio manager, PMS, at Sharekhan. , a brokerage firm owned by BNP Paribas.