SBI 2022-23 Annual Report Analysis

Tue, 6 Jun

SBI has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

SBI Income Statement Analysis

• Interest income during the year rose 21.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 21.6% YoY during the same period.
• Operating expenses increased by 8.9% YoY during the year.
• The bank's net interest income (NII) increased by 20.2% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.1% in FY23 as against 2.9% in FY22.
• Other income increased by 4.7% YoY during the year.
• Net profit for the year increased by 57.3% YoY.
• Net profit margins during the year increased to 15.9% in FY23 from 12.2% in FY22.

SBI Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	2,899,727	3,508,446	21.0%
Other Income	Rs m	1,170,004	1,225,336	4.7%
Interest Expense	Rs m	1,561,943	1,899,808	21.6%
Net Interest Income	Rs m	1,337,783	1,608,638	20.2%
Operating Expense	Rs m	1,743,634	1,898,145	8.9%
Pre-provision Operating Profit	Rs m	764,153	935,828	22.5%
Provisions & Contingencies	Rs m	400,591	370,244	-7.6%
Profit before tax	Rs m	497,356	753,983	51.6%
Tax	Rs m	133,794	188,399	40.8%
Profit after tax	Rs m	353,739	556,482	57.3%
Minority Interest	Rs m	-18,093	-21,017	-16.2%
Net Interest Margin	%	2.9	3.1
Net profit margin	%	12.2	15.9

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SBI Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 44,685.4 bn as compared to Rs 40,874.1 bn in FY22, thereby witnessing an increase of 9.3%.
• Advances for the year stood at Rs 32,679.0 bn as compared to Rs 27,940.8 bn during FY22, a rise of 17.0%.
• Cost of deposits for SBI rose 5.5% and stood at 3.7%, while yield on advances rose to 7.0%.
• The lender's investments rose to Rs 19,131.1 bn during the year from Rs 17,764.9 bn in FY22.
• Borrowing stood at Rs 5,211.5 bn, a growth of 16.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 59,544.2 bn as against Rs 53,608.8 bn during FY22, thereby witnessing a rise of 11.1%.

SBI Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	3,055,880	3,589,313	17.5%
Advances	Rs m	27,940,760	32,679,021	17.0%
Deposits	Rs m	40,874,106	44,685,355	9.3%
Yield on advances	%	6.4	7.0
Cost of Deposits	%	3.5	3.7
Investments	Rs m	17,764,899	19,131,079	7.7%
Borrowings	Rs m	4,491,598	5,211,520	16.0%
Total Assets	Rs m	53,608,835	59,544,183	11.1%

Current Valuations for SBI

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 62.4, an improvement from the EPS of Rs 39.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 584.5, stands at 8.5 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.5 times, while the price to income ratio stands at 1.3 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	324.9	393.1
Earnings per share (Unadj.)	Rs	39.6	62.4
Diluted earnings per share	Rs	39.6	62.4
Avg P/E ratio	Rs	11.0	8.5
Avg P/ABV ratio	Rs	1.4	1.5
Avg Market Cap	Rs	3,883,098	4,732,052
Dividends per share (Unadj.)	Rs	7.10	11.30

Ratio Analysis for SBI

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 73.1x during FY23, from 68.4x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 13.90x during FY23, from 14.85x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): SBI's capital adequacy ratio (CAR) was at 14.7% as on 31 March 2023 as compared to 13.9% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 15.5% during FY23, from 11.6% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.93% during FY23, from 0.66% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 12.46% during FY23, from 8.77% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. SBI's gross NPA ratio stood at 2.8% as of 31 March 2023 compared to 4.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of SBI was 0.7% in financial year 2023. This compared with 1.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	68.4	73.1
Debt to Equity Ratio	x	14.8	13.9
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	13.9	14.7
Return on Equity	%	11.6	15.5
Return on Assets	%	0.7	0.9
Return on Capital Employed	%	8.8	12.5
% of Gross NPAs	%	4.0	2.8
% of Net NPAs	%	1.0	0.7
Yield on Advances	x	6.4	7.0
Yield on Investments	x	5.6	5.9

To see how SBI has performed over the last 5 years, please visit here.

SBI Share Price Performance

Over the last one year, SBI share price has moved up from Rs 463.6 to Rs 584.5, registering a gain of Rs 120.9 or around 26.1%.

Meanwhile, the S&P BSE BANKEX is trading at 50,108.4 (up 0.2%). Over the last one year it has moved up from 40,722.7 to 50,108.4, registering a gain of 9,385.7 points (up 23.0%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, you can check out historical annual results for SBI here and quarterly results for SBI here)