State Bank of India reported better-than-expected profit in the fiscal second quarter, as the country’s biggest lender by assets saw strong credit growth and booked a one-time gain from a sale of shares in its funds management unit earlier in the year.
Net income at the Mumbai-based lender grew 14% from a year earlier to 230.4 billion rupees ($2.4 billion) in the three months ended Sept. 30, beating market estimates of 226.19 billion rupees, according to an exchange filing on Tuesday.
India’s credit growth is accelerating as the ongoing festive season propels consumers to spend and borrow more for consumption purposes. At the same time, firms are also turning to banks for loans.
SBI’s loan book expanded by 3.2% over the previous quarter to 52.08 trillion rupees. Retail loans increased 2.9%, while corporate loans grew 1.3%. Deposits rose 4.5% to 62.78 trillion rupees, against estimates of 62.51 trillion rupees.
SBI’s margins rose despite the pressure in the second quarter from the lag in deploying funds raised through foreign currency non-resident deposits for lending. The state-owned bank’s net interest margin stood at 3.11%, up from 3.08% a year earlier. Net interest income grew 15% to 491.4 billion rupees.
The lender reported an exceptional gain of 72.9 billion rupees from its stake sale in SBI Funds Management Ltd. State Bank of India and France’s Amundi SA offered as many as 203.71 million shares in the nation’s largest fund house by assets.
SBI’s gross non-performing loan ratio stood at 1.39% as of the end of September, compared with 1.47% at the end of the prior three months.