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SBI beats Reliance to become India’s most profitable company


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The State Bank of India (SBI), the nation’s largest lender, has announced record-breaking quarterly and annual profits. In the March quarter, SBI’s net income reached Rs 20,698 crore, marking a 24 percent growth and surpassing the consolidated numbers of Reliance Industries, which has long been the most profitable firm in India. SBI’s annual profit peaked at Rs 61,077 crore.

As of May 2024 State Bank of India has a market cap of $87.33 Billion. As of May 2024 Reliance Industries has a market cap of $228.03 Billion

Reliance Industries and TCS Comparisons

While Reliance Industries reported Q4 net income of Rs 18,951 crore, down from Rs 19,299 crore the previous year, it still holds the top position in terms of annual earnings with consolidated earnings of Rs 69,621 crore. In comparison, TCS, the largest software exporter, reported Q4 net income of Rs 12,434 crore, which is approximately 60 percent of SBI’s earnings for the same period.

SBI’s Revenue and Asset Quality

SBI leads the corporate sector by a wide margin in terms of annual revenue from operations, with Rs 1.11 trillion, a 19 percent increase from the previous year’s Rs 92,951 crore. SBI Chairman Dinesh Kumar Khara highlighted the bank’s record improvement in asset quality, with gross bad loan piles falling to a 10-year low of 2.24 percent, down from 2.78 percent the previous year. Net NPA (non-performing assets) also decreased to 0.57 percent from 0.67 percent.

Factors Affecting SBI’s Net Income

Khara mentioned that SBI’s net income for the quarter would have been higher by Rs 7,100 crore if not for the additional provision made towards pension liabilities after the implementation of a new wage pact. SBI had already set aside around Rs 13,500 crore for this purpose.

Dividend and Stock Performance

SBI declared a dividend of Rs 13.70 per share for FY24. On the day of the announcement, SBI’s stock closed at Rs 819.65, up 1.14 percent, while the market gauge experienced a decline of 1.6 percent.

Loan Growth and Future Outlook

SBI experienced one of the best loan growth rates in over eight quarters, with over 16 percent growth in the March quarter. Khara expects this trend to continue in FY25. He mentioned that credit growth has been robust across all segments, with the retail, rural, and medium companies (RAM) book crossing the Rs 20 trillion mark in FY24. SBI also has Rs 4 trillion worth of corporate loans sanctioned. Khara expects a sustained credit growth rate of 15-16 percent and a deposit growth rate of around 13-14 percent in the future.

Total Income and Expenses

In Q4, SBI’s total income rose to Rs 1.28 trillion from Rs 1.06 trillion the previous year, while operating expenses increased by 20 percent to Rs 30,276 crore from Rs 29,732 crore. The bank mentioned that IT spends are one of the biggest expense heads, but did not provide specific numbers.

Asset Quality and Provisioning

SBI’s overall provisions nearly halved to Rs 1,609 crore from Rs 3,315 crore in the year-ago period. Regarding the RBI draft on provisioning against infrastructure projects, Khara stated that incremental provisions would not be significant and that the bank would be able to absorb them. The project loan book stood at Rs 1.21 trillion.

Gold Loan Portfolio and Liquidity

SBI assured that there is no need to worry about the gold loan portfolio, as they have already reviewed the asset quality of the Rs 1.3 trillion book. The bad loan ratio for this portfolio is only 0.16 percent. The bank currently has an excess liquidity of Rs 3.5 trillion, which is invested in government securities, along with an additional Rs 67,500 crore in held-to-maturity securities.

Hiring and Employee Replacements

SBI is in the process of hiring around 12,000 employees, with over 85 percent of the recruits being engineers. The bank saw over 27,000 employees retire in the last fiscal year, and as a policy, they replace only about 75 percent of retirees per annum.

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