2025-11-20 20:57:34
Latest Post
Hester Biosciences Ltd appoints Mr. Ashish Desai as CFO and KMP
WABAG secures ADB funded 'Large' DBO order from Melamchi Water Supply Development Board, Government of Nepal
Brightcom Group Ltd updates on Strategic Partnership with Dailymotion Advertising
ACME Solar commissions second phase of additional 16 MW of its 100 MW wind power project in Gujarat
Godrej Properties adds INR 2,400 crore additional revenue potential to its recent acquisition on Sarjapur Road, Bengaluru
Research
Views on State Bank of India 3QFY2014 results - Angel Broking
Posted On : 2014-02-23 00:45:59( TIMEZONE : IST )
Views of Mr. Vaibhav Agrawal (VP- Research - Banking, Angel Broking) on State Bank of India 3QFY2014 results:
"SBI reported weak performance both on the operating as well as on the asset quality front. Net slippages (slippages adjusted for recoveries/upgrades) for the bank came much ahead of ours and street's expectations at around Rs. 8700cr as against around Rs4,600cr in 2QFY2014. Higher net slippages resulted in 16% sequential increase in Net NPA. Write offs at Rs. 5077cr during quarter largely restricted further increase in Net NPAs. Gross and Net NPA ratios were higher by 9bp and 33bp qoq respectively to 5.7% and 3.2%. Restructuring during the quarter came in sequentially much lower at Rs. 3,900cr vs. around Rs. 9,300cr in 2QFY2014 and was broadly in-line with management guidance given post 2QFY2014 results (they had then indicated restructuring pipeline of around Rs. 6,000cr over next few quarters).
On the operating front, NII grew by 13% yoy (aided by 17% advances growth), in-line with our expectations. Domestic margins remained largely flat sequentially at 3.51%. Non-interest income grew healthily by 16% yoy. Opex grew by 31% yoy, on expected lines, on back of higher retirement benefits provisioning and wage revision provisioning. Pre-provisioning operating profit remained largely flat at Rs. 7618cr. Provisioning expenses grew 56% yoy (NPA Provision increased by 24% yoy) and overall earnings de-grew by 34% yoy at Rs. 2,234cr.
The bank's has witnessed elevated asset quality pressure for quite some time now, reflecting the overall weak macro environment. We await management comment particularly regarding the outlook on asset quality going ahead. The bank's core strength lies in its high CASA and fee income, which has supported its core profitability in current challenging times. Its strong capital adequacy also provides comfort. In our view, SBI's current valuations factors in most of its asset quality concerns and provides an opportunity for investment from a medium term point of view, keeping in mind the impending rate cycle reversion in next fiscal. Currently our target price is under review."
