State Bank of India Reports Higher Profit on Strong Loan Growth and One-Time Gain

State Bank of India posted a higher net income of 230.4 billion rupees for the fiscal second quarter, beating market estimates of 226.19 billion rupees. India's biggest lender by assets grew its profit by 14 percent from a year earlier in the three months ending Sept. 30, supported by strong credit demand and a one-time gain.

Loan Growth And Deposits

Credit growth in the country is picking up speed as festive season spending pushes consumers to borrow more for buying goods. At the same time, companies are also approaching banks for more credit. The bank's total loan book grew by 3.2 percent over the previous quarter to reach 52.08 trillion rupees. Retail loans went up by 2.9 percent, while corporate loans grew by 1.3 percent. Deposits also rose by 4.5 percent to 62.78 trillion rupees, beating the estimate of 62.51 trillion rupees.

Margins And Gains

The lender reported an exceptional gain of 72.9 billion rupees from selling a stake in SBI Funds Management Ltd. State Bank of India and France's Amundi SA offered up to 203.71 million shares in the country's largest fund house by assets. The bank's net interest margin improved to 3.11 percent from 3.08 percent a year earlier, and net interest income grew by 15 percent to 491.4 billion rupees. Meanwhile, the gross bad loan ratio improved to 1.39 percent at the end of September, dropping from 1.47 percent in the previous three months.

Context

State-owned banks in India often see stronger credit uptake during the festive months as consumer spending and business activity rise together. Financial institutions closely track metrics like net interest margins and bad loan ratios to measure their overall health and lending efficiency.