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Shares of SBI fell nearly 3% on Monday after the bank reported a weak set of earnings for the first quarter of fiscal 2023, as profit fell against an expectation of growth.
State Bank of India (SBI) Chairman Dinesh Kumar Khara said on Monday that India’s biggest lender would benefit from margin improvement due to a delay in raising deposit rates, even though lending rates are seeing faster transmission with an increase in the policy rate by RBI.
“All in all, in the scenario of higher interest rates, there is always a lag effect when it comes to deposits and to that extent, banks will definitely benefit from the situation,” Khara said during an interview. an interview with CNBC-TV18. .
Tenors | General public rates | Senior rates |
7 days to 45 days | 2.90% | 3.40% |
46 days to 179 days | 3.90% | 4.40% |
180 days to 210 days | 4.40% | 4.90% |
211 days to less than 1 year | 4.60% | 5.10% |
1 year to less than 2 years | 5.30% | 5.80% |
2 years to less than 3 years | 5.35% | 5.85% |
3 years to less than 5 years | 5.45% | 5.95% |
5 years and up to 10 years | 5.50% | 6.30% |
SBI shares fell nearly 3% on Monday after the bank reported a weak set of earnings for the first quarter of fiscal 2023, with earnings falling against an expectation of double-digit growth.
The share was trading down 2.41% to Rs 518 per share on BSE at the time of writing. It gained 6% last month while it is up 12.47% this year so far. SBI gained 18.87% last year, outperforming Sensex by around 11%.
SBI’s profit at Rs 6,068 crore, down 6.7% year-on-year (YoY), missed Street’s estimates by a massive margin, with analysts expecting a rise in numbers from 16 to 18%. A CNBC-TV18 poll had estimated the profit at Rs 7,688.2 crore.
The decline in net profit was due to a massive 80% fall in non-interest income to Rs 2,312 crore from Rs 11,802 crore, due to losses of Rs 6,549 crore in investments following a spike in yields bondholders.
“We now seem totally insulated from rising bond yields,” Khara told a virtual news conference.
Net interest income, although down from the survey estimate, jumped 13% from a year ago on improved credit drawdown and asset quality.
Net interest margin — a measure of bank profitability — rose 8 basis points year on year to 3.23%, but fell 17 basis points sequentially. NIMs, however, are expected to increase.
“I don’t see much of a loan portfolio challenge in terms of quality, which actually gives me confidence that maybe we should have much better NIMs,” Khara said.
For the first time, deposits saw a sequential decline in 22 quarters to Rs 40.45 lakh crore, but were up 8.7% from a year ago. Advances amounted to Rs 28.15 lakh crore, up 15.8% year-on-year and 3% quarter-on-quarter, with domestic advances jumping 14% and foreign office advances jumping 22.4% .
Slippages, however, saw a strong sequential increase.
Gross non-performing assets fell 141 basis points year-over-year to 3.91%, but were down slightly quarter-on-quarter. Provisions decreased by 15% to Rs 4,268 as asset quality improved.
The loan book grew 14.9% with healthy corporate and retail books. While business loans increased by 10.57% compared to last year, the retail portfolio saw a jump of 18.58%.
“In retail we continue to see decent trends the way we have grown in this quarter of around 18% we expect an almost similar trend to continue,” added President.
Most brokerages remain positive on the stock, raising their target price.
First post: STI