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SBI: Better Asset Quality Aids Profits - Views on News from Equitymaster
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SBI: Better Asset Quality Aids Profits
Nov 6, 2015 | Updated on Nov 9, 2015

State Bank of India (SBI) declared its results for the second quarter of the financial year 2015-16 (2QFY16). The net interest income for the quarter grew by 7.4% YoY and the profit was up by 25% YoY. Here is our analysis of the results.
Performance summary
  • Net interest income (NII) grew by 7.4% YoY in 2QFY16 on a 10.3% YoY growth in advances. For 1HFY16, NII increased by 5.5% YoY.
  • Non-interest income increased by 35.6% YoY and 28% YoY in 2QFY16 and 1HFY16, respectively.
  • NIMs (net interest margins) contracted to 3.32% in 2QFY16 from 3.49% in 2QFY15 on account of relatively slower fall in cost of deposits as compared to yield on advances.
  • Net NPAs (Non Performing Assets) ratio has reduced from 2.73% in 2QFY15 to 2.14% in 2QFY15 on lower slippages.
  • Net profit grew by a robust 25% YoY in 2QFY16 on the back of lower operating expenses and higher treasury income. Provisions remained flat during the quarter. For 1HFY16, net profit was up by 17.4% YoY.
  • Capital adequacy ratio stood at 12.2% at the end of 2QFY16 as per Basel III norms.

Standalone Financials

Rs (m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Interest income 372,626 406,576 9.1% 737,497 803,005 8.9%
Interest expense 239,880 264,050 10.1% 472,229 523,159 10.8%
Net Interest Income 132,746 142,526 7.4% 265,268 279,846 5.5%
Net interest margin (%) 3.49% 3.32%        
Other Income 45,708 61,973 35.6% 88,228 112,852 27.9%
Other Expense 93,330 101,839 9.1% 179,592 198,018 10.3%
Provisions and contingencies 43,654 43,606 -0.1% 79,525 83,603 5.1%
Profit before tax 41,470 59,053 42.4% 94,380 111,077 17.7%
Tax 10,465 20,262 93.6% 29,885 35,362 18.3%
Profit after tax/ (loss) 31,004 38,791 25.1% 64,495 75,715 17.4%
Net profit margin (%) 8.3% 9.5%   8.7% 9.4%  
No. of shares (m)         7,762.8  
Book value per share (Rs)*         176.0  
P/BV (x)         1.38  

* (Book value as on 30th September 2015)

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