SBI’s Q3 Earnings: Understanding the 35% Net Profit Decline and Future Prospects

Explore the impact of SBI’s Q3 Earnings with insights from Chairman Dinesh Khara. Uncover reasons behind the 35% net profit decline and future prospects. #SBI #Q3Earnings


State Bank of India (SBI), the country’s largest lender, recently reported a 35% year-on-year decline in net profit for the December quarter. In an exclusive interview with ET Now, SBI Chairman Dinesh Khara discussed the reasons behind this dip and shed light on the bank’s Q3 earnings.

Analyzing the Reason for the Decline of SBI’s Q3 Earnings:

The primary factor contributing to the dip in December quarter net profit was a one-time provisioning of Rs 7,100 crore. Chairman Khara explained that this provision was related to a long-pending pension matter in the court for nearly two decades. The resolution involved addressing an anomaly in pension payments, resulting in a substantial one-time provision. Additionally, a wage hike provision of Rs 5,400 crore for the next quarter was highlighted, stemming from the Indian Banks Association’s final settlement at 17%, surpassing the earlier assumed 14%.

SBI's Q3 Earnings: 35% Net Profit Decline

Future Projections:

Despite the dip in the December quarter, SBI maintains a credit growth target of 14-16% for FY24. Chairman Khara expressed optimism about the fourth quarter, expecting improved business performance. He attributed this positive outlook to the overall economic growth and a GDP expected to be around 7.3%.

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Margin Decline and Credit Growth:

The decline in margins, according to Khara, was a result of increased deposit rates. Looking ahead, he anticipates similar margins, emphasizing the bank’s commitment to maintaining growth in corporate credit. SBI has a pipeline of approximately 4.6 trillion, indicating a positive trajectory for credit growth.

Managing Fresh Slippages:

Addressing concerns about fresh slippages, Khara expects better performance in the agricultural sector in the coming months. He mentioned the concentrated renewal of agricultural loans in November and December, causing a temporary blip, and reassured efforts to handle slippages, especially in the stressed asset space.

Capital Ratios and Growth Plans:

Discussing capital ratios, Khara acknowledged the impact of increased risk rates by RBI but expressed confidence in maintaining a capital adequacy ratio of around 14.32%. SBI is open to exploring capital-raising options if needed, aligning with the bank’s commitment to supporting balance sheet growth.

Outlook on Credit Cost:

Khara provided a positive outlook on credit cost, emphasizing the bank’s efforts to keep it around the current level of 0.25%. The focus is on maintaining stability in credit costs for the next quarter and the entire year.


State Bank of India’s Q3 earnings faced challenges due to one-time provisions and unexpected wage hike settlements. However, Chairman Dinesh Khara remains optimistic about the bank’s future performance, expecting positive traction in the upcoming quarters. SBI’s strategic approach to managing challenges and its commitment to maintaining stable credit costs reflect its resilience in the evolving financial landscape. Investors and stakeholders can closely monitor the bank’s initiatives and projections for a comprehensive understanding of its growth trajectory.

When was SBI established?

The State Bank of India (SBI) was established on July 1, 1955, through the amalgamation of the Bank of Bombay, Bank of Madras, and Bank of Bengal.

What is the qualification of SBI Chairman Mr. Dinesh Khara?

Mr. Dinesh Khara, the Chairman of the State Bank of India (SBI), is a qualified Chartered Accountant and holds a Bachelor’s degree in Commerce. Additionally, he is a Certified Associate of the Indian Institute of Bankers.

Who is the first chairman of SBI?

The first Chairman of the State Bank of India (SBI) was Mr. Osborne Smith. He served as the Chairman from 1st July 1955 to 30th September 1957, during the initial period of SBI’s establishment through the amalgamation of three Presidency Banks.

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