InvestorQ : What are the key takeaways from the latest quarterly results of SBI and how could the stock shape up in the future?
Riya Dwivedi made post

What are the key takeaways from the latest quarterly results of SBI and how could the stock shape up in the future?

Answer
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rhea Babu answered.
7 months ago


SBI managed to pose an amazingly good set of numbers for the December quarter with strong growth in profits. Here are some highlights.

· SBI benefited substantially from the Rs.11,000 crore recovery from Essar Steel. This boosted SBI’s recoveries by 51%. On the operational front, SBI also reported net interest income growth of 22% for the December quarter.

· Gross bad loan ratio (NPA ratio) dropped from 7.53% to 6.94%. This does not factor in the under reporting of bad loans by SBI as pointed out clearly by the divergence analysis of bad loans conducted by the RBI.

· Lender provision coverage ratio at 81.7% is one of the best in the PSU banking industry. SBI’s exposure to Dewan Housing neutralized most of the benefits from Essar recovery. DHFL slippages increased to Rs.16,525 crore.

· Loan growth was dismal at less below 6%. However, the management commentary on slippages was sanguine and that should please investors. SBI’s SMA (special mention accounts) that is an early warning system is quite low.

The growth in interest income and the rise in PSU banking appetite is positive for the stock. You can stay invested or you can look to buy in small quantities and accumulate in a systematic manner.