SBI: Eyeing loan growth - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

SBI: Eyeing loan growth

Jul 30, 2002

State Bank of India's (SBI) first quarter profits spurred by 32% YoY, driven by a strong improvement in operating margins. The bank's interest income however, witnessed a single digit growth of 6% during the June quarter. Slowdown in industrial activity has impacted the bank's corporate loan disbursements.

(Rs m)1QFY021QFY03Change
Income from operations 71,414 75,359 5.5%
Other Income 9,905 10,345 4.4%
Interest expense 49,956 51,202 2.5%
Net interest income 21,458 24,157 12.6%
Other expenses 16,733 17,342 3.6%
Operating Profit 4,725 6,815 44.2%
Operating Profit Margin (%)-11.7%9.0% 
Provisions and contingencies 4,627 4,7783.3%
Profit before Tax10,00312,38223.8%
Tax 4,205 4,75012.9%
Profit after Tax/(Loss)5,7987,63231.6%
Net profit margin (%)8.1%10.1% 
No. of Shares (m) 526.3 526.3  
Diluted Earnings per share*44.158.0 
P/E Ratio 3.9 

Interest income from advances continued to slide lower, trimming the overall performance of the bank. However, the reduction was lower compared to a YoY 7% decline witnessed in 4QFY02. The bank's aggressive foray into retail financing market could help in saving the topline growth in the coming quarters. Its investments income also witnessed a single digit growth as incremental investments would have been at a significantly lower yield. Lower treasury gains seems to have impacted its fee-based income also, which was up by a marginal 4%. The bank is facing stiff competitive pressure on its forex and cash management services business.

Income break-up
Rs m)1QFY021QFY03Change
Interest on advances 28,540 28,127 -1.4%
Income on investments 33,077 36,116 9.2%
Interest on bal with RBI 6,792 8,406 23.8%
Others 3,005 2,711 -9.8%
Total 71,414 75,359 5.5%

During the quarter, the bank's operating margins turned into black with lower cost of funds and savings on employee cost. A 13% growth in net interest income and a reduction in cost to income ratio to 50% (from 53% in 1QFY02) suggest strength in the bank's financial performance. Lower tax and non-performing loan provision further contributed in fueling the bottomline growth.

At the current market price of Rs 226, SBI is trading at a P/E of 4x 1QFY03 annualised earnings and adjusted price to book value ratio of 1.4x. Concerns of growth in the bank's loan portfolio and pressure on fee based income could curtail the bank's earnings growth in the current year despite a strong improvement in operating margins.

Equitymaster requests your view! Post a comment on "SBI: Eyeing loan growth". Click here!


More Views on News

SBI Announces Quarterly Results (1QFY21); Net Profit Up 81.2% (Quarterly Result Update)

Aug 3, 2020 | Updated on Aug 3, 2020

For the quarter ended June 2020, SBI has posted a net profit of Rs 42 bn (up 81.2% YoY). Sales on the other hand came in at Rs 665 bn (up 6.2% YoY). Read on for a complete analysis of SBI's quarterly results.

SBI Announces Quarterly Results (4QFY20); Net Profit Up 327.1% (Quarterly Result Update)

Jun 8, 2020 | Updated on Jun 8, 2020

For the quarter ended March 2020, SBI has posted a net profit of Rs 36 bn (up 327.1% YoY). Sales on the other hand came in at Rs 627 bn (down 0.5% YoY). Read on for a complete analysis of SBI's quarterly results.

How the YES Bank Collapse Unfolded - 10 Points (Sector Info)

Mar 9, 2020

A timeline of how YES Bank went from a stock market darling to a pariah.

Today's Stock Market Crash: 10 Points (Sector Info)

Mar 6, 2020

Top factors that dragged the markets lower today.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 23, 2020 (Close)