Wage provisions limit SBI Q2 net profit growth to 9 pc

MUMBAI: SBI reported a 9.13 pc rise in consolidated net profit to Rs 16,099.58 cr for the Sept quarter, weighed down by money it had to set aside for employees’ impending wage and pension revisions.

On a standalone basis, the State Bank of India (SBI) had a 8.03 per cent increase in the profit after tax for the reporting quarter at Rs 14,330 cr. However, the same was down 15.13 per cent compared to Rs 16,884 cr in the June quarter.

It’s core net interest income grew 12.27 per cent to Rs 39,500 cr on the back of a 12.39 per cent growth in advances but the Net Interest Margin (NIM) contracted 0.12 per cent to 3.43 per cent as the cost of deposits rose.

SBI Chairman Dinesh Kumar Khara said the operating profit declined over 8 per cent to Rs 19,417 cr for the quarter. He pointed to the surge in provisions for wages and pensions to over Rs 5,900 cr as a major factor behind the fall in operating profit.

The bank, which started provisioning for an increase in wages and pensions since last November, revised up the pay growth assumption to 14 per cent from 10 per cent resulting in the hit, he said.

A write-back of over Rs 1,200 cr from higher-than-required standard asset provisions done in the past helped reduce the hit of higher wage provisions on the bank’s profits.

Kolkata: State-owned lender UCO Bank is implementing a strategic shift in its growth plan, concentrating on the pursuit of a “profitable” corporate loan portfolio expansion while identifying retail, MSME, and agriculture as its key drivers of growth in the coming quarters. This shift in perspective concerning the bank’s corporate loan portfolio coincides with the delayed rate cut expectations, attributed to global inflation and geopolitical uncertainties. Furthermore, the bank has adopted a less aggressive approach to term deposits, choosing to prioritise CASA accounts to manage its cost of funds.