InvestorQ : How were the quarterly results of State Bank of India for the June 2022 quarter?
ishika Banerjee made post

How were the quarterly results of State Bank of India for the June 2022 quarter?

2 months ago

For the June 2022 quarter, SBI net profits fell by 6.7% to Rs6,068 crore. The fall in profits was to the tune of 33% on a sequential basis over the March 2022 quarter. The fall in profits was on account of a sharp fall in non-interest income largely accounted for by the spike in mark to market (MTM) losses on the bond investment book. That is due to the spike in yields in the last few months, causing bond price depreciation. Net profits missed the Bloomberg estimates of Rs8,392 crore by a full 27.6%.

Fundamentally, the numbers were fairly good. For instance, the Net interest income (NII) for the June 2022 quarter grew 13% at Rs31,196 crore on the strength of improved credit offtake across segments. There was also a marked improvement in the asset quality as evidenced by lower provisioning and lower gross NPAs. However, the villain of the piece was the fall in non-interest income by 80% to Rs2,312 crore. This was largely an outcome of the massive MTM loss on investments booked in the quarter to the tune of Rs6,549 crore.

However, this does put the bank in a fairly safe situation for future quarters. The bank management has confirmed that the current provisions for MTM losses would hold good even if the benchmark yields on the 10-year government securities touched 7.45%, which is a coverage of another 15 to 20 bps higher from here. However, the bank does not internally view the yields going much higher from these levels and is confident of a write back of nearly Rs1,900 crore in the form of excess MTM provisioning done.

Net interest margin or the NIMs were up by 8 basis points at 3.23%. On the positive side, the loan loss provisions fell by 15% yoy to Rs4,268 crore in Q1FY23. On the asset quality front, the bank saw the gross NPAs fall by 141 bps on a yoy basis to 3.91%, which is rather comfortable considering the rather high levels of NPAs seen by SBI in the past. Slippages were down by 38% on a yoy basis. The growth in domestic advances during the quarter was strongly led by a growth in home loans followed by corporate and SME loans.