SBI board approves to raise $2 billion through bonds in FY22; stock up 3%

Shares of State Bank of India jumped 3 per cent to Rs 364 apiece on the BSE on Wednesday after the bank's board approved to raise $2 billion through a public offer or private placement. In comparison, the benchmark S&P BSE Sensex was up 1.7 per cent at 2:00 PM.

"The Executive Committee of the Central Board in its meeting on 28th April, 2021 has approved to examine the status and decide on long term fund raising in single/multiple tranches up to $ 2 billion through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY22," it said in an exchange filing. READ HERE

The bank in January concluded the issuance of $600 million (about Rs 4,500 crore) from bonds to fund the expansion of the overseas business. Funds were raised through senior unsecured fixed rate notes with maturity of five and a half years years and coupon of 1.80 percent payable semi-annually under Regulation-S, SBI said.

So far in the current calendar year, the scrip has soared 28.3 per cent on the BSE compared with the Sensex's 2.4 per cent gain. 

A solid net interest income (NII) growth, coupled with healthy recoveries and fewer provisions and aided by low base of the previous year, may help State Bank of India (SBI) to report a robust March quarter (Q4FY21) result, analysts say. However, given the second wave of Covid-19 in the country, analysts would track the management’s asset quality outlook, growth in loan book, and restructuring trends. 

At the operational level, analysts at Nomura expect the lender’s pre-provision or operating profit to increase 23.5 per cent on year to Rs 22,804.3 crore from Rs 18,465.1 crore reported in the previous year period. On a quarterly basis, the operating profit may grow 31.6 per cent from Rs 17,333.2 crore. 

This healthy growth in the profit, analysts say, would be driven by a double digit growth in net interest income (NII). Analysts are baking-in a growth in the interest income anywhere between 22-32 per cent YoY, in the range of Rs 27,731.2 crore to Rs 30,045.5 crore. SBI’s NII in Q4FY20 was Rs 22,766.9 crore, and Rs 28,819.9 crore in Q3FY21.