Disappointing set of numbers from banking behemoth SBI led the banking stocks to fall like a pack of cards and dragged the indices in the Indian stock market deep into the negative territory today. While the BSE-Sensex lost in the region of around 208 points (down 1.1%), the NSE-Nifty ended lower by around 60 points (down 1.1%). The BSE Midcap and BSE Small cap indices however, fared slightly better, both closing lower by around 0.6% each.
Most Asian indices closed the day mixed, with India featuring as the top loser in the region. Europe too is trading in the red currently. The rupee was trading at Rs 45.06 to the dollar at the time of writing.
SBI, the largest bank in the country today announced its fourth quarter and full year results for the financial year 2010-11 (FY11). The bank saw its net interest income grow by 15% YoY in FY11, on the back of 20% YoY growth in advances. Its NIMs (net interest margins) also moved up from 2.7% in FY10 to 3.3% in FY11 on lower cost of deposits. Profits were however, an altogether different story. The bank's net profit fell by 10% YoY in FY11, and by 99% YoY in 4QFY11 as provisions on advances and higher tax outlay ate into profits.
The bank had to make an extra Rs 5 bn provision on standard assets for its teaser-rate home loan schemes in accordance with the RBI's guidelines. The retail loan segment, of which home loans was a major contributor, was a huge growth driver for the bank over the past year. With the scheme coming to a close, and with the RBI's recent bout of rate hikes, the bank's growth prospects in this segment may be affected. SBI's capital adequacy ratio stood at 11.98% at the end of FY11 as per Basel II, indicating the need for a further capital infusion. However, with its right issue now being postponed, the only plausible course of action would be for the bank to temper its growth aspirations. The stock closed close to 8% lower for the day.
Aurobindo Pharma recently got approval for its generic drugs, Risperidone and Alendronate tablets from Australia's Therapeutic Goods Administration (TAG). These drugs are used to treat schizophrenia and osteoporosis, respectively. According to IMS, the market size of Risperdione is about US$ 27.5 m and that of Alendronate is US$ 14 m as of September, 2010. The stock however closed almost 2% lower in a weak market.