JOIN USSBI net up 30.24% at Rs 2,910 crore
The State Bank of India (SBI) reported a 30.24 per cent increase in net profit for the third quarter ended December 31, 2014, at Rs 2,910 crore compared with Rs 2,234 crore in the same quarter of the previous fiscal.
Net interest income for the bank during the quarter increased 9.2 per cent to Rs 13,777 crore from Rs 12,616 crore in the comparable quarter. “Profits during the quarter have risen as we have contained operating expenses. Massive pullback on the costs side, stable net interest income, and good fee income aided profits,” SBI Chairman Arundhati Bhattacharya said.
Profit on sale of investments have also been good, which also aided the profits, Bhattacharya added. Operating expenses during the quarter increased to Rs 9,720 crore from Rs 9,213 crore in Q3 of the last fiscal. Staff expenses during the reported quarter decreased to Rs 5,842 crore from Rs 5867 crore in the comparable quarter.
Asset quality improved significantly as compared with the same quarter of the previous fiscal. Gross non-performing assets (NPAs) decreased to 4.9 per cent during the reported quarter compared with 5.73 per cent in Q3 of FY14. Net NPAs also declined to 2.8 per cent during the quarter compared with 3.24 per cent (YoY). Standard restructuring during the quarter stood at Rs 4,092 crore.
Analysts remained bullish on the prospects of the stock post the results and maintained a positive outlook on the stock.
“Core earnings came in line with our expectations while PAT came lower than our expectations on the back of higher provisions. Positive surprise came on the fresh impairment which is down QoQ to Rs.96.2 billion as against the run-rate of around Rs 125 billion seen during previous two quarters. Even headline NPAs have remained stable at 4.9 per cent, a positive in our view,” Saday Sinha, banking analyst at Kotak Securities, said.
“On the asset quality front, gross NPAs were steady (QoQ) at 4.9 per cent compared with 4.89 per cent (QoQ) and improved by 83 basis points (YoY) from 5.73 per cent in Q3 FY 2014. At current market price, the stock is trading at 1.3 x FY 2016E asset based value (ABV). We recommend a BUY rating,” Vaibhav Agrawal (VP Research (Banking), Angel Broking said.
Demand for SBI Life pie
Bhattacharya said that a lot of investors had shown interest in buying stake in SBI Life Insurance. “We have had talks with our joint venture partners in our life insurance venture. Existing partners are keen on hiking stake. There are third-party investors who are keen on buying a stake,” she said.
However, there are no immediate plans to list the insurance venture, she added. Bhattacharya said that the bank had appointed bankers for its fund-raising plans. “We have appointed eight bankers for our fund-raising plans,” she said.
We will be having an AGM soon to take shareholder nod for our fund-raising plans. The bank has a window of one year for the fund-raising raising and so we have not taken a call on the timing and the instruments, Bhattacharya added. SBI is also planning a mega auction next month as part of its recovery process.
“We are planning to have a mega auction on March 14 for 300 assets amounting to Rs 1200 crore out of which 100 will be residential,” she said.