Takeaways from SBI Results
Net profit was marginally lower than market expectation
While State Bank of India’s net profit was marginally lower than market expectation, quality of its loan book has taken a beating on account of the slowdown. Profit would have been much lower but for a strong income stream from its treasury. The stock has slipped by nearly 4% after announcement of its results.
Following are the key takeaways from its June 2012 results:
- Net profit in June 2012 increased by 137% from Rs 1,583 crore in June 2011 to Rs 3752 crore, but were lower than that of March 2012 quarter at Rs 4050 crore.
- However, Gross non-performing assets shot up to 4.99% as compared to 3.52% in June 2011 and 4.44% in March 2012.
- Net NPA increased from 1.61% in June 2011 to 2.22% in June 2012. Net NPA stood at 1.82% at the end of March 2012, highlighting the sharp deterioration in the last three months.
- Profits would have been much lower but for a strong performance by the treasuries. While revenue from treasury operation stood at Rs 6935 crore in June 2012 as compared to Rs 6018 in June 2011 and Rs 6210 in March 2012, profit before tax (PBT) contribution from it was Rs 2065 crore as compared to a loss of Rs 839 crore in June 2011 crore and small profit of Rs 414 crore in March 2012.
- Profit from retail banking saw a decline from Rs 3522 crore in June 2011 to Rs 2882 crore in June 2012. In March 2012, retail banking posted a strong profit of Rs 5234 crore.
- Capital adequacy ratio of the bank has again slipped below 12% as per Basel l from 12.05% in March 2012 to 11.53% in June 2012. It was at 10.56% in June 2011, which forced the government to pump in capital into the bank. As per Basel ll, capital adequacy ratio stood at 13.17% as compared to 13.86% in the previous quarter.
- SBI is feeling the heat of slowdown as it net interest income (NII) was down by 4% as compared to the previous quarter, nearly five% lower than consensus estimates.
- Deposit growth was slower at 16% compared with credit growth of 20%, resulting in borrowing and lower net interest margins (NIM) which fell by 32 basis points.
- Cost on deposits has also increased from 5.95% in March 2012 to 6.24 in June 2012% while yield on advances has dropped 11.05 in March 2012 to 10.86 in June 2012.
- Return on assets also slipped from 1.15% in March 2012 to 1.03% in June 2012.
- Gross slippages stood at Rs 10,000 crore while net slippages were at Rs 7,300 crore.