SBI Q2 profit up 25% to Rs 3879cr, asset quality improves
Advances for the quarter grew by 10.5 percent
year-on-year to Rs 13.37 lakh crore and deposits growth was 10.85 percent at Rs
16.3 lakh crore, the bank said in its filing.
Country's largest lender State
Bank of India 's (SBI) July-September quarter earnings beat analysts'
expectations on Friday. Standalone profit shot up 25.1 percent to Rs 3,879
crore from Rs 3,100.4 crore year-on-year, driven by other income and operating
profit. Low provisions also boosted profitability but higher tax cost limited
growth.
Net interest income, the difference between interest earned
and interest expended, increased by 7.4 percent to Rs 14,252 crore from Rs
13,274.6 crore in same period.
Advances for the quarter grew by 10.5 percent year-on-year to Rs 13.37 lakh crore and deposits growth was 10.85 percent at Rs 16.3 lakh crore, the bank said in its filing.
Advances for the quarter grew by 10.5 percent year-on-year to Rs 13.37 lakh crore and deposits growth was 10.85 percent at Rs 16.3 lakh crore, the bank said in its filing.
According to analysts polled by CNBC-TV18, profit was
estimated at Rs 3,581 crore and net interest income at Rs 14,099 crore for the quarter.
Other income (non-interest income) surged 35.6 percent
year-on-year to Rs 6,197 crore, including Rs 485.45 crore on account of
exchange gain on repatriation of funds from foreign offices.
Operating profit grew by 20.6 percent on yearly basis to Rs
10,266 crore in quarter gone by. However, tax expenses increased sharply 93.6
percent to Rs 2,026.2 crore compared to Rs 1,046.5 crore year-on-year.
Another positive factor was its asset quality improvement
during the quarter. Gross non-performing assets as a percentage of gross
advances declined to 4.15 percent in September quarter compared 4.29 percent in
preceding quarter and 4.89 percent in year-ago period. Net NPA also fell to
2.14 percent during the quarter from 2.24 percent quarter-on-quarter and 2.73
percent year-on-year.
SBI said provisions and contingencies increased 9 percent
sequentially (down 0.1 percent on yearly basis) to 4,360.6 crore, adding
provisions for non-performing assets climbed 14.4 percent quarter-on-quarter
(down 6.7 percent year-on-year) to Rs 3,841.8 crore in quarter ended September
2015.
Provision coverage ratio improved to 70.48 percent at the
end of September quarter against 69.49 percent in June quarter.
Capital adequacy ratio (as per BASEL III norms) also
improved to 13.19 percent in Q2FY16 compared to 12.99 percent in preceding
quarter and 12.87 percent in same quarter last fiscal.
Suruchi Jain of Morningstar says she expects the bank to maintain its NIM in the upcoming quarters. She says the brokerage has been recommending buying the stocks, adding that it continues to be undervalued.
Suruchi Jain of Morningstar says she expects the bank to maintain its NIM in the upcoming quarters. She says the brokerage has been recommending buying the stocks, adding that it continues to be undervalued.
At 12:14 hours IST, the scrip of State Bank of India was
quoting at Rs 243.55, up Rs 9.35, or 3.99 percent on the BSE.
SBI Q2 PAT seen up 16%; NII, loan growth likely to be
tepid
According to average of estimates of analysts polled by
CNBC-TV18, profit is seen rising 15.5 percent year-on-year to Rs 3,581 crore
and net interest income may increase 6.21 percent to Rs 14,099 crore in
July-September quarter.
Country's largest lender State
Bank of India (SBI) will announce its quarterly earnings on
November 6. Analysts expect profit growth, which may be better than June
quarter, to be dependent on provisions while net interest income and loan
growth may be muted due to weak corporate loan demand during the quarter.
According to average of estimates of analysts polled by
CNBC-TV18, profit is seen rising 15.5 percent year-on-year to Rs 3,581 crore
and net interest income may increase 6.21 percent to Rs 14,099 crore in
July-September quarter.
In June quarter, profit had grown 10.2 percent and net
interest income increased 3.6 percent. Provisions climbed 14.4 percent on
yearly basis but fell 39 percent sequentially to Rs 3,999.73 crore. Loan growth
was 6.6 percent with corporate advances up 13 percent year-on-year.
Net interest margin will be closely watched during the
quarter as SBI slashed its base rate by 40 basis points to 9.3 percent on
September 29. Analysts feel the impact is likely in Q3FY16. In June quarter
domestic net interest margin declined 25 basis points Q-o-Q to 3.29 percent as
base rate was cut by 30 basis points.
In asset quality, 5:25 scheme, sale of loans to asset
reconstruction companies (ARCs sale in Q1 was just Rs 29 crore) and slippages
will be closely watched.
Analysts expect slippages for September quarter at around Rs
6,000-7,000 crore. So slippages anything higher than Rs 7,500 crore or higher
than June quarter (and Q2FY15) may be negative. In Q1FY16 and Q2FY15, slippages
stood at Rs 7,318 crore due to seasonality and Rs 7,700 crore, respectively.
As far as 5:25 scheme is concerned, SBI had refinanced
around five accounts worth Rs 6,000-6,500 crore in June quarter. Post Q1,
pipeline of nine accounts worth Rs 12,300 crore warrants closer monitoring for
SBI under 5:25, feel analysts.
In sale of loan to ARCs, Bhushan Steel, Essar, ABG, Abhijit
Group and Amtek accounts would be closely watched.
Happy Investing
Source:Moneycontrol.com
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