The State Bank of India (SBI), the country's largest public sector lender, has reported a significant growth in its net profit for the July-September quarter (Q2 FY25). The bank's net profit rose by 27.92% year-on-year, reaching Rs 18,331 crore. This robust growth is a testament to the bank's strong operational performance and its ability to navigate the challenging economic landscape.

The bank's operating profit also saw a substantial increase, growing by 50.87% to Rs 29,294 crore year-on-year. This growth in operating profit is indicative of the bank's efficient management and its ability to generate higher revenues.

In terms of the bank's Return on Assets (ROA) and Return on Equity (RoE), the figures stood at 1.13% and 21.78% respectively for the half year (H1 FY25). These figures reflect the bank's ability to generate profits from its assets and shareholders' equity.

Key Financial Metrics

The bank's net interest income (NII) for Q2 FY25 also saw an increase, rising by 5.37% YoY. This increase in NII is a positive sign, indicating that the bank's core business of lending is performing well.

The bank's Gross NPA ratio stood at 2.13%, showing an improvement of 42 bps YoY. Similarly, the net NPA ratio at 0.53% also showed an improvement of 11 bps YoY. These figures indicate that the bank has been successful in managing its non-performing assets.

In the quarter under review, the bank's credit growth came in at 14.93%, with domestic advances growing by 15.55% YoY. The bank had Rs 51,17,284 crore as total deposits in the September quarter, marking a 9.13% growth compared to Rs 46,89,218 crore in the September quarter of the previous fiscal year.

Digital Growth and Market Response

The bank's domestic Current Account Saving Account (CASA) deposits grew by 4.24%, while domestic term deposits grew by 12.51%. The CASA ratio stood at 40.03% as on September 30.

In terms of the bank's SME and retail personal advances loans, they registered YoY growth of 17.36% and 12.32% respectively in the quarter. The bank also reported that 61% of SB accounts were acquired digitally through the YONO digital banking platform. The share of alternate channels in total transactions increased from 97.7% in H1 FY24 to 98.2% in H1 FY25.

Despite the positive financial results, the stock of SBI was down 2.3% at Rs 839.70 apiece during the intra-day trade.

Broader Corporate Earnings Landscape

In the broader context, the Q2 earnings season has been a mixed bag for Indian companies. While major companies across sectors have already released their Q2 numbers for FY25, market participants and investors are keenly waiting for many others to announce their earnings report.

The corporate earnings scorecard for Q2FY25 has been weak, but excluding commodities, it's broadly in-line. According to a report by Motilal Oswal Financial Services (MOFSL), "The earnings spread has deteriorated, with only 62% of MOFSL Coverage Universe either meeting or exceeding profit expectations. Consumption has emerged as a weak spot while select segments of BFSI are seeing asset-quality stress. Nifty FY25 EPS has seen another 1% cut after a 4% cut in preview. Overall Nifty EPS has seen 7% downward revision in the last six months, reducing the expected FY25 earnings growth to just 5%, weakest since FY20."

The performance of India Inc is also under scanner as the country is watching its performance in the previous quarter and also the impact of the recent victory of Donald Trump in the US presidential election on the performance during the ongoing quarter and fiscal year.