29 August, 2014 19:30 IST
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Analysts` take on SBI Q2 results & outlook
Source: IRIS (12-NOV-12)
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India's largest lender, State Bank of India (SBI) announced Friday a rise of 30.16% y-o-y in net profit to Rs 36.58 billion for the quarter ended Sept. 30, 2012. Analysts on an average had expected net profit to come at Rs 34.44 billion. During the quarter, total income grew 12.21% to Rs 329.84 billion over same period last year.

The bank made provision of Rs 18.37 billion for September quarter which was 37.11% lower compared last year quarter.Net NPAs was at Rs 226.15 billion, as compared to Rs 161.21 million as on corresponding quarter last year, representing an increase of 40.28%.

We have collated views of analysts on how they view numbers and outlook on SBI:

Rikesh Vinod Parikh, vice-president, equities, Motilal Oswal:

SBI reported numbers were below estimate, NII declined 1% qoq and operating expenses grew by 9% however PAT was in line with estimate at Rs 36.9 billion due to lower provisioning during the quarter.  Overall SBI disappointed on NPA front with GNPA increasing from 5 to 5.2 & Net NPA increasing from 2.2 to 2.4, also provision coverage ratio has declined due to lower provision in current quarter.

Kashyap Jhaveri, research analyst, Emkay Global Financial Services:

SBI Q2FY13 NII at Rs 109.7 billion (+5% yoy) below est led by 23 bps qoq contraction in NIM to 3.34%. However with lower provisioning, net profit at Rs 36.6 billion (+30% yoy) inline with est.  Core operating profit declines 6.5% yoy (-11% qoq) driven by disappointment on both NIMs (down 23bps qoq) and fee income (down 6% yoy) front. Fresh slippages at R 84.6 billion (3.7% of loans). Net slippages (adj) remained higher at Rs 55.8 billion. Q2 saw restructuring of Rs 46.9 billion. Total addition to stressed assets at Rs 131 billion. Pressure on margins, fewer avenues for fee income to retain pressure on operating matrix. Stressed assets continue to remain an issue. Maintain `Reduce` with TP of Rs 1,750.

ICICIdirect:

Fresh slippages for SBI remained at elevated levels of Rs 84.95 billion. It has been consistently disappointing with average slippage run-rate of Rs 80 billion in the past five quarters barring a single March 2012 quarter. We believe that in forthcoming quarters, some of these accounts may get upgraded that will limit net additions to GNPA despite fresh slippages. NII came lower than estimated at Rs 109.73 billion due to higher deposit growth (16.5% YoY) causing CoF to rise and partly due to interest income reversal on high slippages. Domestic NIM stood at 3.68% (down 18 bps QoQ) while global NIM was 3.34% (down 23 bps QoQ). Going forward, SBI can use its excess SLR of Rs 600 billion for credit disbursement in H2FY13E, which will support management guidance of 3.7% NIM despite lending rate cuts. We believe SBI’s healthy NII will cover the provisioning burden even if asset quality concerns persist. The bank has decent return ratios with RoA of 0.9% and RoE of 16%. We recommend a `Hold` rating on the stock.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.



State Bank Of India   (Q,N,C,F)*


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