State Bank of India (SBI) on Friday reported a 41% year-on-year (y-o-y) rise in its fourth quarter net profit to Rs 9,113.53 crore, as improving asset quality helped the lender cut down on provisions. Growth in core income also supported the bank’s quarterly performance.

Net interest income (NII), or the difference between interest earned and expended, rose 15% y-o-y to Rs 31,198 crore. The net interest margin (NIM) improved marginally to 3.12% from 3.11% in Q3FY22.

The bank’s gross advances grew 11% y-o-y to Rs 28.19 trillion as on March 31, 2022. Retail loans grew 15% y-o-y, while the domestic corporate loan book grew 6.35%. SBI chairman Dinesh Khara said that the bank has started seeing traction in the corporate loan segment from the third quarter onwards. “Going forward, we are seeing much better capacity utilisation in terms of the working capital. The working capital utilisation has improved almost to 56%, which was 50% earlier,” Khara said.

According to Khara, the turn in the interest rate cycle is unlikely to affect demand for credit. “So long as there is demand in the economy, there is bound to be a situation where investments would happen,” he said, adding, “The way things are evolving this year, I think it is going to be a scenario where there will be demand for all infrastructure requirements.”

SBI still has an unutilised portion of around Rs 4.6 trillion as working capital and term loans. In the term loan segment, the unutilised portion stands at 19-20%. Taken together with the unutilised working capital limits and term loans, loan proposals in the pipeline are to the tune of Rs 4.6 trillion, Khara said.

Deposits grew slower than loans at 10% y-o-y to Rs 40.52 trillion as on March 31, with the current account savings account (CASA) ratio falling 85 bps y-o-y to 45.28%.

Provisions fell 34.5% y-o-y to Rs 7,237 crore in the March quarter, while slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s gross non-performing asset (NPA) ratio fell 53 bps sequentially to 3.97% and the net NPA ratio declined 32 bps to 1.02%.

The bank reported an NPA ratio of13.33% in its agri loan book and 6.55% in its small and medium enterprises (SME) book. The management ascribed the high NPA ratio in the agri book to macroeconomic factors, specifically rural distress.

SBI’s shares ended 3.76% lower than their previous close on the BSE at Rs 445.05 on Friday.