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SBI: Provisions wipe off last qtr profits - Views on News from Equitymaster
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SBI: Provisions wipe off last qtr profits
May 17, 2011

State Bank of India (SBI) declared its FY11 (financial year 2011) results. The bank has reported 15% YoY growth in interest income and 10% YoY fall in net profits for the year. Here is our analysis of the results.

Performance summary
  • Net interest income grows by 15% YoY in FY11, on the back of 20% YoY growth in advances.
  • Other income grows by a marginal 6% YoY in FY11 on the back of lower profits on sale of investments.
  • NIMs (net interest margins) move up from 2.7% in FY10 to 3.3% in FY11 with higher proportion of low cost deposits.
  • Net NPAs reduce from 1.7% in FY10 to 1.6% in FY11.
  • Net profit falls by 10% YoY in FY11, and by 99% in 4QFY11 as provisions on advances and higher tax outlay eat into profits.
  • Capital adequacy ratio stood at 11.98% at the end of FY11 as per Basel II, indicating the need for a further capital infusion.

    Rs (m) 4QFY10 4QFY11 Change FY10 FY11 Change
    Interest income 179,656 217,214 20.9% 709,939 813,944 14.6%
    Interest expense 112,442 136,633 21.5% 473,225 488,680 3.3%
    Net Interest Income 67,214 80,581 19.9% 236,714 325,264 37.4%
    Net interest margin (%)       2.7% 3.0%  
    Other Income 45,085 48,155 6.8% 149,682 158,246 5.7%
    Other Expense 60,361 67,938 12.6% 203,187 230,154 13.3%
    Provisions and contingencies 23,494 41,570 76.9% 43,948 103,813 136.2%
    Profit before tax 28,445 19,227 -32.4% 139,261 149,542 7.4%
    Tax 9,779 19,019 94.5% 47,600 66,897 40.5%
    Profit after tax/ (loss) 18,666 209 -98.9% 91,661 82,645 -9.8%
    Net profit margin (%) 10.4% 0.1%   12.9% 10.2%  
    No. of shares (m)         635.0  
    Book value per share (Rs)*         1014.0  
    P/BV (x)         2.3  
    * (Book value as on 31st March 2011)

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