Informist, Saturday, Aug 3, 2024
--SBI Apr-Jun net profit 170.35 bln rupees
--Analysts saw SBI Apr-Jun net profit 168.80 bln rupees
--SBI Apr-Jun total income 1.227 trln rupees
--SBI Apr-Jun total income 1.227 trln rupees vs 1.080 trln
--SBI Apr-Jun net profit 170.35 bln rupees vs 168.84 bln
--SBI gross NPA ratio 2.21% as on Jun 30 vs 2.24% qtr ago
--SBI net NPA ratio 0.57% as on Jun 30, unch from a qtr ago
--SBI: Board OKs raising up to 250 bln rupees via bonds in FY25
--SBI Apr-Jun provisions 34.49 bln rupees vs 25.01 bln
--SBI Apr-Jun NPA provisions 45.18 bln rupees vs 26.52 bln
--SBI provision coverage ratio 74.41% as on Jun 30
--SBI Basel III capital adequacy ratio 13.86% as on Jun 30
--SBI Apr-Jun NII 411.25 bln rupees, up 5.7% on year
--SBI Apr-Jun NIM 3.35% vs 3.47% quarter ago
--SBI advances 38.12 trln rupees as on Jun 30, up 15.4% on year
--SBI deposits 49.02 trln rupees as on Jun 30, up 8.2% on year
--SBI current, savings account ratio 40.70% as on Jun 30
--SBI: Apr-Jun NPA upgrades, recoveries at 36.66 bln rupees
--SBI: Apr-Jun fresh slippages at 79.03 bln rupees
--SBI: Apr-Jun credit cost 0.48% vs 0.37% quarter ago
--SBI: Apr-Jun slippage ratio 0.84% vs 0.43% quarter ago
--SBI: Domestic retail loans 13.68 trln rupee Jun 30, up 13.6% on yr
--SBI: Domestic corporate loans 11.39 trln rupee Jun 30, up 15.9% YoY
--SBI Khara: Premature to discuss listing of payments arm
--SBI Khara: Premature to discuss listing of general insurance arm
--Khara on SBI equity valuation: Still not getting the right value
--SBI Khara: Traction in green bond not that high
--SBI Khara: Have ample scope to come out with another infra bond
--SBI Khara: No constrains on bond mkt invest from RBI's invest norms
--SBI Khara: Retail loan growth continues at 11-12%
--SBI Khara: Corporate loan book pipeline is at 4.62 trln rupees
--SBI Khara: May be able to operate NIMs at 3.2-3.4%
--SBI Khara: Will take calls on MSME lending based on risk appetite
--SBI Khara: Effort is there to protect margins as much as possible
--SBI Khara: Seeing decent opportunity to grow in the MSME space
--SBI Khara: Evaluating the conditions to increase deposit rates
--SBI Khara: Excess SLR shielding need to up deposits for loan growth
--SBI Khara: Mindful in terms of growing the deposit franchise
--SBI Khara: No challenge as far as asset quality is concerned
--SBI Khara:Can support balance sheet growth at current capital level
--SBI Khara: Bank is adequately capitalised
--CONTEXT: Comments by SBI's management in a post-earnings press meet
--SBI Khara: Credit growth robust across all segments
By Kshipra Petkar and Aaryan Khanna
MUMBAI/NEW DELHI – State Bank of India's Apr-Jun net profit rose only marginally on year to 170.35 bln rupees as a rise in total income was offset by higher provisions. The provisioning pulled down the bottomline 17.7% from the previous quarter, although the hit was not as bad as analysts expected.
According to an average of estimates from 12 brokerage firms, the state-owned lender's profit after tax was expected at 168.80 bln rupees. On Friday, the bank's shares ended 1.7% lower at 847.85 rupees on the National Stock Exchange.
SBI's total income grew 13.6% on year to 1.227 trln rupees, helped by a 16.2% rise in interest earned. Its net interest income also rose 5.7% on year to 411.25 bln rupees, lower than analyst projections of 8.9% growth. On the operating profit, the nation's largest lender's Apr-Jun performance was 4.6?tter than a year ago, at 264.49 bln rupees.
SBI Chairman Dinesh Khara said that they are very mindful about their margins. "Our cost of deposit has gone up about 45 basis points, but when it comes to NIMs (net interest margins), it has only dropped about 11 basis points. So that's a very clear reflection that we have been very, very conscious in terms of the cost of deposits," Khara said.
The bank's margins were at 3.35% in Apr-Jun. Khara said the bank may be able to operate at margins in the range of 3.2-3.4%. The cost of deposits was at 5.0%.
Regardless, provisions rose 38% from a year ago to 34.49 bln rupees and pulled down the bottomline. Of this, provisions for non-performing loans were up 70% on year to 45.18 bln rupees, continuing a trend from Jan-Mar, when the outlay on these provisions had more than doubled. Total expenses net of provisions rose 16.3% on year to 962.39 bln rupees in Apr-Jun.
The bank's asset quality continued to improve. Its gross non-performing asset ratio fell to 2.21% as on Jun 30 from 2.24% a quarter ago and 2.76% a year ago. The net NPA ratio was unchanged from the previous quarter at 0.57% on Jun 30, but fell from 0.71% from a year ago.
The bank reported slippages of 79.03 bln rupees. Of this, Khara said the bank has already recovered 10 bln rupees in July. Slippages for Apr-Jun increased by 3.19% on year and the slippage ratio for the reporting quarter improved by 10 bps on year to 0.84%. In Apr-Jun the NPA upgrades, recoveries were at 36.66 bln rupees, as per an investor presentation.
Capital metrics of the most systemically important bank in India worsened in Apr-Jun. The Basel-III capital adequacy ratio fell to 13.86% on Jun 30 from 14.28% on Mar 31. Even the bank's Common Equity Tier-I capital ratio tightened to 10.25% from 10.36% a quarter ago.
In addition to the earnings, the board of India's largest bank approved raising 250 bln rupees through bonds in 2024-25 (Apr-Mar). He also said that the bank has ample scope to come out with another infrastructure bond issue and that RBI's investment norms are not stopping the bank from tapping the bond market.
Advances of the public sector bank were up 15.4% on year to 38.12 trln rupees as on Jun 30 and deposits were at 49.02 trln rupees, up 8.2% on year. Khara said the retail loan growth continues at 11-12%.
Corporate loan book pipeline is at 4.62 trln rupees, he said.
The bank saw robust credit growth across all segments. The domestic retail loans were up 13.6% on year to 13.68 trln rupees as on Jun 30 and the domestic corporate loans rose nearly 16% on year to 11.39 trln rupees. Within deposits, the current, savings account ratio was at 40.70% as on Jun 30. In January, the bank had launched a green rupee term deposit, which Khara said has not been gaining a lot of traction.
He said the bank is seeing opportunities in the micro, small and medium business segment. "So long as the risk in the segment is in sync with our appetite, we will be keen on growing in the space," Khara said.
"I think I expect that we should be in a position to maintain our earlier guidance of about 14-16% kind of a growth, and more towards 15% kind of a growth is something which we expect to deliver in this year," Khara said.
Asked about the impact of Reserve Bank of India's draft norms on the liquidity coverage ratio, Khara said they are still awaiting the final guidelines but the initial assessment made by the bank "does not really warrant any triggers of being overly concerned."
Separately, when asked about the valuation of the bank in the market, he said they are still not getting the right value. "It is for the market to comment. I am not happy. With the kind of balancesheet, and the kind of growth potential that we have...we are still not getting our right value." About plans to list the general insurance arm and the payments arm, Khara said that it is still premature to talk about it.
June quarter earnings were the last quarterly earnings of the bank under Khara as chairman. He will be succeeded by Challa Sreenivasalu Setty later this month. End
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