State Bank of India | Z+ Insurance

Not a merger with Sahara Life, just transfer of policyholders: SBI Life

SBI Life, a subsidiary of country’s biggest lender State Bank of India (SBI), has said it is not a merger between the two companies but only a transfer of the policyholder related assets and liabilities of Sahara Life Insurance.

On Friday regulator Irdai directed SBI Life Insurance to takeover the policy liabilities of around two lakh policies along with assets of stressed Sahara India Life Insurance Co Ltd (SILIC).

The decision was taken at the meeting of the Insurance Regulatory and Development Authority of India (Irdai) in view of deteriorating financial health of the SILIC.

Following the Irdai order, SBI Life assured two lakh policyholders of “high levels” of service and commitment as is accorded to our customers.

“We have started and we are expeditiously working on the process of integrating all these policyholders in our systems. While the full integration may take some time, we request these policyholders to reach out to us on our helpline number 1800 267 9090 or email us at saharalife@sbilife.co.in,” it said

SBI Life will shortly reach out to these policyholders and intimate them about various touch points and manner of servicing for a smooth transition, it said.

Sahara Life Insurance was also not allowed to underwrite new business. Thereafter, further directions were issued to the insurer to meet the regulatory requirements.

“Despite being provided ample opportunities and sufficient time to ensure compliances, SILIC has failed to comply with directions of the authority and take any affirmative steps to protect the interests of its policyholders,” the regulator had said.

Further, the policy data of SILIC reveals that the company’s portfolio is showing run-off trend. The financial position has been deteriorating with rising losses and higher percentage of claims to total premium.

“If the trend is allowed to continue, the situation will worsen and lead to erosion of capital and SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” Irdai had said.

It said the action against SILIC has been taken after due consideration of all the facts and circumstances.

The authority added in its meeting held on June 2, 2023 that the action was warranted to protect the interest of the policyholders of SILIC.

Further, Irdai said it will continue to monitor the situation and also issue necessary directions as required in the interest of the policyholders of SILIC.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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State Bank of India’s Q4 standalone net jumps 83% to Rs 16,695 crore

State Bank of India’s (SBI’s) standalone profit in the January-March quarter of FY23, declared on Thursday, grew by 83.19 per cent to a record Rs 16,695 crore on the back of healthy net interest income (NII) and lower provisions. The previous best quarterly profit was Rs 14,205 crore in Q3FY23.

For the full financial year 2022-23, the bank’s standalone net profit grew 58.58 per cent to Rs 50,232 crore. The standalone numbers represent the banking operations of SBI.

SBI’s consolidated net profit was up 57.31 per cent at Rs 55,648 crore in 2022-23. This is the second-highest reported profit among listed companies that have announced their earnings so far — after Reliance Industries’ Rs 66,702 crore — and almost Rs 10,000 crore ahead of HDFC Bank’s Rs 45,997 crore.

SBI had reported a consolidated net profit of Rs 35,374 crore in FY22.

“For the third quarter running we have posted the highest ever quarterly [net] profit. For the full year our [net] profit is the highest ever by any bank in India,” said Dinesh Khara, chairman, in the post-earnings interaction with the media.

The board of directors has declared a dividend of 1,130 per cent — Rs 11.30 per share (of Rs 1 each) — for FY23, the SBI informed the BSE. Its shares closed 2.11 per cent lower at Rs 574.15 per share.

The public-sector lender’s NII, that is interest revenues minus interest expenses, grew 29.47 per cent year-on-year (YoY) to Rs 40,393 crore in Q4 FY23 as against Rs 31,198 crore in Q4 FY22. The net interest margin (for domestic operations) improved to 3.84 per cent in Q4 FY23 from 3.44 per cent in Q4FY22.

“NII increased on the back of improvement in yields and credit off take,” Khara said.

Referring to the net interest margin (NIM) trajectory in FY24, Khara said there was room for the marginal cost of funds-based lending rate (MCLR) to go up, which could boost margins. The MCLR is a benchmark for pricing corporate credit.

Non-interest income rose to Rs 13,961crore in Q4FY23 from Rs 11,880 crore in Q4FY22.

The bank’s operating expenses grew 27.27 per cent YoY to Rs 29,733 crore in Q4FY23. This reflects the impact of provisions for upcoming wage revisions in the banking industry. SBI is making a provision of Rs 500 crore each month for wage revision.

Advances grew 15.99 per cent YoY to Rs 32.69 trillion in FY23. Growth in advances was driven by retail loans (17.64 per cent) followed by small and medium enterprises.

J Swaminathan, managing director (corporate banking), said corporate loan growth was expected to remain robust across sectors like roads, ports, and aviation. Khara said there was a pipeline of Rs 1.75 trillion of corporate credit, in addition to Rs 1.78 trillion of sanctions, which are awaiting disbursement.

The corporate loan book is expected to grow 10-12 per cent in FY24.

As for liabilities, the deposits increased by 9.19 per cent YoY to Rs 44.23 trillion. The share of low-cost money — current account and saving accounts (CASA) — in domestic deposits stood at 43.8 per cent at the end of March 2023, down from 45.28 per cent a year ago.

While the bank did not spell out an estimate for deposit growth in FY24, Khara said it would be able to raise adequate resources to meet credit demand and would not require aggressive deposit mobilisation. Also, the bank has excess statutory liquidity ratio (SLR) securities of Rs 4 trillion and part of it can be monetised to raise resources.

Its capital adequacy ratio (CAR) stood at 14.68 per cent with common equity tier of 10.27 per cent at the end of March.

SBI Life Insurance’s net profit grew to Rs 1,721 crore in FY23 from Rs 1,506 crore in FY22. Another subsidiary, SBI General Insurance, posted a net profit of Rs 184 crore in FY23, up from Rs 131 crore in FY22. The mutual fund subsidiary posted a net profit of Rs 1,331 crore in FY23, up from Rs 1,071 crore in FY22.

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