SBI 2021-22 Annual Report Analysis

Thu, 31 Mar

SBI has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the bank during the year 2021-22.

SBI Income Statement Analysis

• Interest income during the year rose 4.3% on a year-on-year (YoY) basis.
• Interest expenses were up by 0.1% YoY during the same period.
• Operating expenses increased by 15.9% YoY during the year.
• The bank's net interest income (NII) increased by 9.6% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 2.9% in FY22 as against 3.0% in FY21.
• Other income increased by 9.1% YoY during the year.
• Net profit for the year increased by 57.9% YoY.
• Net profit margins during the year increased to 12.2% in FY22 from 8.1% in FY21.

SBI Income Statement – 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Interest Income	Rs m	2,781,155	2,899,727	4.3%
Other Income	Rs m	1,072,224	1,170,004	9.1%
Interest Expense	Rs m	1,560,102	1,561,943	0.1%
Net Interest Income	Rs m	1,221,053	1,337,783	9.6%
Operating Expense	Rs m	1,504,296	1,743,634	15.9%
Pre-provision Operating Profit	Rs m	788,981	764,153	-3.1%
Provisions & Contingencies	Rs m	546,184	400,591	-26.7%
Profit before tax	Rs m	328,088	497,356	51.6%
Tax	Rs m	85,291	133,794	56.9%
Profit after tax	Rs m	224,055	353,739	57.9%
Minority Interest	Rs m	-14,824	-18,093	-22.1%
Net Interest Margin	%	3.0	2.9
Net profit margin	%	8.1	12.2

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SBI Balance Sheet Analysis

• The bank's deposits during FY22 stood at Rs 40,874.1 bn as compared to Rs 37,153.3 bn in FY21, thereby witnessing an increase of 10.0%.
• Advances for the year stood at Rs 27,940.8 bn as compared to Rs 25,006.0 bn during FY21, a rise of 11.7%.
• Cost of deposits for SBI fell 9.9% and stood at 3.5%, while yield on advances fell to 6.4%.
• The lender's investments rose to Rs 17,764.9 bn during the year from Rs 15,951.0 bn in FY21.
• Borrowing stood at Rs 4,491.6 bn, a growth of 3.5% as compared to previous year.
• Overall, the total assets and liabilities for FY22 stood at Rs 53,608.8 bn as against Rs 48,456.2 bn during FY21, thereby witnessing a rise of 10.6%.

SBI Balance Sheet – as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	2,755,616	3,055,880	10.9%
Advances	Rs m	25,005,990	27,940,760	11.7%
Deposits	Rs m	37,153,312	40,874,106	10.0%
Yield on advances	%	7.1	6.4
Cost of Deposits	%	3.9	3.5
Investments	Rs m	15,951,003	17,764,899	11.4%
Borrowings	Rs m	4,337,962	4,491,598	3.5%
Total Assets	Rs m	48,456,185	53,608,835	10.6%

Current Valuations for SBI

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 39.6, an improvement from the EPS of Rs 25.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 561.1, stands at 11.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.6 times, while the price to income ratio stands at 1.3 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Income per share (Unadj.)	Rs	311.6	324.9
Earnings per share (Unadj.)	Rs	25.1	39.6
Diluted earnings per share	Rs	25.1	39.6
Avg P/E ratio	Rs	11.5	11.0
Avg P/ABV ratio	Rs	1.5	1.6
Avg Market Cap	Rs	2,570,288	3,883,098
Dividends per share (Unadj.)	Rs	4.00	7.10

Ratio Analysis for SBI

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 68.4x during FY22, from 67.3x during FY21. 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 14.85x during FY22, from 15.06x during FY21. 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 13.9% as on 31 March 2022 as compared to 13.8% 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 11.6% during FY22, from 8.1% during FY21. 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 0.66% during FY22, from 0.46% during FY21. 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 8.77% during FY22, from 7.08% during FY21. 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 4.0% as of 31 March 2022 compared to 5.0% 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 1.0% in financial year 2022. This compared with 1.5% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Credit/Deposit Ratio	x	67.3	68.4
Debt to Equity Ratio	x	15.1	14.8
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	13.8	13.9
Return on Equity	%	8.1	11.6
Return on Assets	%	0.5	0.7
Return on Capital Employed	%	7.1	8.8
% of Gross NPAs	%	5.0	4.0
% of Net NPAs	%	1.5	1.0
Yield on Advances	x	7.1	6.4
Yield on Investments	x	5.9	5.6

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 462.0 to Rs 561.1, registering a gain of Rs 99.2 or around 21.5%.

Meanwhile, the S&P BSE BANKEX is trading at 46,701.0 (up 2.1%). Over the last one year it has moved up from 39,542.9 to 46,701.0, registering a gain of 7,158.2 points (up 18.1%).

Overall, the S&P BSE SENSEX is up 7.8% over the year.

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

Read: Latest Annual Report Analysis of SBI