Why SBI Profit decreased? SBI reported low Profit for first time in 3 years, Know reason

The State Bank of India (SBI) has reported a decline in net profit for the first time in 12 quarters. In the third quarter of fiscal year 2024 (Q3FY24), SBI’s standalone net profit dropped 35.5% year-on-year (yoy) to ₹9,164 crore. In the same quarter of the previous year, SBI had reported a net profit of ₹14,205 crore. In this article, we will know the reason why the profit of SBI decreased in December 2023-2024 quarter.

Why SBI reported low profit this quarter?
SBI’s Chairman, Dinesh Kumar Khara, highlighted that the bank made a liability provision of ₹5,400 crore in Q3FY24 to address an anomaly in pension calculations that had been ongoing since 2002. Additionally, ₹1,700 crore was set aside for dearness relief neutralization for retirees before 2002.
Analyst View on SBI’s Performance
Experts mentioned that SBI’s Q3FY24 performance was impacted by one-off items, but the overall earnings remained healthy due to lower credit costs despite weak core operating performance.


SBI’s net interest income (NII), which represents the difference between interest earned and interest expended, increased by 4.59% yoy to ₹39,816 crore in Q3FY24. This compares to ₹38,069 crore in Q3FY23.
Other income, which includes fee income, earnings from foreign exchange and derivative transactions, profit or loss on sale/revaluation of investments, dividends from subsidiaries, and recoveries made in written-off accounts, remained almost flat at ₹11,459 crore in Q3FY24.
Decrease in Total Provisions and Improvement in Asset Quality
SBI witnessed a significant decline in total provisions, which amounted to ₹4,072 crore in Q3FY24 compared to ₹11,014 crore in the same quarter last year. This decrease can be attributed to a sharp fall in standard asset provisions, a decline in income tax provisions, and a write-back in investment depreciation and other provisions.
The bank’s asset quality showed improvement, with gross non-performing assets (NPAs) declining to 2.42% of gross advances as of December-end 2023, compared to 2.55% as of September-end 2023. Net NPAs remained static at 0.64% of net advances.
Credit Growth and Deposit Growth
SBI’s Chairman noted that credit growth, with gross advances growing at 14.38% yoy, has been robust and broad-based. The bank currently has a loan pipeline of ₹4.6 lakh crore, with 75% being accounted for by the private sector and the remaining balance by the public sector. Gross advances stood at ₹35,84,252 crore as of December-end 2023.
Deposit growth rebounded, but sustained credit growth has widened the gap between the two. Total deposits increased by 13.02% yoy and stood at ₹47,62,221 crore.
Capital Adequacy Ratio (CAR) and Future Plans
SBI’s CAR declined to 13.05% in Q3FY24 from 14.28% in Q2FY24. However, if the ploughback of nine months of retained profit amounting to ₹40,000 crore is considered, the CAR would be around 14.38%. The bank is also open to raising equity capital.