At the same time, asset quality remained a sticky point as slippages soared and large recoveries continued to elude the bank.

Asked for a glide path for future recoveries, SBI chairman Rajnish Kumar said nearly Rs 16,000 crore can come from three accounts undergoing insolvency proceedings. “Every quarter I am looking towards the sky and the gods, (asking) will we get all those decisions and recover that amount? Every morning I pray to God,” he said.

Recoveries and upgradations in Q1FY20 stood at Rs 5,769 crore, while technical write-offs added up to Rs 15,482 crore.

India’s largest lender reported a 10.6% y-o-y rise in operating profit in Q1FY20 to Rs 13,246 crore. The bank had recovered Rs 1,900 crore in the same quarter of last year and that had reflected in the operating profit and interest income. Kumar told reporters after the bank’s results, “The bank’s policy is to provide aggressively and continue to improve the provision coverage ratio.” SBI’s provision coverage ratio (PCR) improved to 79.34% in June 2019 from 69.25% a year ago. It holds 71% worth of provisions on its corporate book.

In respect of two “fairly large” accounts, SBI has provided about Rs 2,300 crore which is not included in the PCR since they are not non-performing assets (NPAs), but are under resolution.

SBI’s net interest income — the difference between interest earned and interest expended — rose 5% y-o-y to Rs 22,939 crore and the domestic net interest margin (NIM) — a key measure of profitability — fell 1 basis point (bps) sequentially to 3.01%. The bank guided for a NIM of 3.1% for FY20.

The lender’s capital adequacy ratio (CAR) rose 6 bps sequentially to 12.89% in Q2.

SBI’s asset quality remained stable in the June quarter, with gross NPAs as a percentage of gross advances remaining unchanged sequentially at 7.53%. The net NPA ratio increased six bps quarter-on-quarter (q-o-q) to 3.07%.

Slippages shot up 116% sequentially to Rs 16,212 crore. Kumar said that of the gross slippages, one is a Rs 2,000-crore exposure to a company owned by a Maharatna, which is regular in all respects, but had to be classified as an NPA because of one bank which could not implement a resolution plan fully as per the February 12 circular. “Another reason contributing to the higher slippages is agriculture, where in one state alone, because of the debt waier, the incremental gross slippages are almost Rs 2,000 crore,” Kumar said, adding, “In SMEs (small and medium enterprises) last year we had the benefit of restructuring, where almost Rs 1,500 crore was the benefit to the bank. This year, there is no such benefit and some accounts have slipped into NPA category.” At present, the bank’s slippage ratio stands at 2.83% and Kumar expects to bring it down to 2% by the end of March 2020.

SBI has an exposure of Rs 1.14 lakh crore to 453 accounts admitted for insolvency proceedings by the National Company Law Tribunal (NCLT) and the total provision on those accounts stood at 81.4%. To another 123 accounts where cases have been filed but which are yet to be admitted, it has an exposure of Rs 25,725 crore, while the provisions against it stand at around 45%.

SBI reported gross advances growth of Rs 12.47% y-o-y to Rs 22.38 lakh crore in Q1FY20 and its total deposits grew 7.32% y-o-y to Rs 29.49 lakh crore in the same period. While the bank’s corporate and small & medium enterprise (SME) loans grew 11.62% and 2.24% y-o-y respectively, loans to individuals grew 18.68% y-o-y to Rs 6.64 lakh crore.

“As far as credit growth is concerned, the trend is always that the second half is always busy and we have kept a modest target of 12%. Even last year the growth came from the large corporate or public-sector undertakings by the government. Even this year, I am expecting that there will be good spending from the public-sector undertakings,” Kumar noted.

SBI’s current account savings accounts (CASA) ratio stood at 45.1% as on June 30, unchanged from the year-ago quarter. In absolute terms, CASA deposits grew 7.37% y-o-y to Rs 12.84 lakh crore.

Shares of SBI ended at Rs 308.45 on the BSE on Friday, down 2.76% from their previous close.