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Arti Chavan made post

What is the huge loss that RBI has pointed out in the books of SBI? How is that likely to impact the share price of SBI in the coming days?

Answer
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Crowny Pinto answered.
8 months ago


I think you are referring to the divergence of Rs.11,932 crore pointed out by the RBI with respect to the profits of SBI for the financial year 2018-19. The RBI’s contention has been that the bank under reported the NPAs by Rs.11,932 crore in the previous as per the RBI definition. If that had been provided for then SBI would have actually ended up reporting a loss of Rs.6900 crore instead of a profit of Rs.862 crore that was actually reported. Now SBI will have to restate it is previous year profits accordingly.

Coming to the issue of how it will impact the stock price; I think the impact may not be much. Here is why. Firstly, the SBI has already made subsequent provisions or has made enhanced recoveries against its troubled loans. Hence the net impact may not be much. Secondly, the stock has some hidden value advantages in the form of its insurance business and AMC business as well as the cards business that is not reflected in the price. Already, it is the lowest priced bank in valuation terms among the big names. So any meaningful downsides look unlikely on the stock.