Hello Investors! Today we have an interesting update from the banking world.
Not only the country's largest bank but the world's 26th most valuable bank State Bank of India i.e, SBI has declared its 4th quarter results
and it is creating quite a buzz in the investment community.
Yes, the bank's results may have heated the palace this summer, but the heart of SBI investors has got a lot of chill from this news.
For the quarter ending March, SBI reported 83% growth in its standalone net profit. Yes, you heard right!
The net profit of the bank today reached Rs 16,695 crore as against Rs 9,114 crore in the same quarter last year.
This number is commendable. But wait, it doesn't end here!
The SBI board has also declared a dividend of Rs 11.30 per share for its investors.
In this video, we will tell you
Let's take a closer look at all the numbers. In this section, we will cover 9 financial metrics.
First of all, we will talk about Net Interest Income.
Now if we are talking about banks then how can we forget about net interest income?
The difference between the bank's interest income generated from lending activities and the interest it paid to depositors is called net interest income.
Net interest income of the bank increased by 29% to Rs 40,393 crore in the fourth quarter.
This is quite a promising number, especially when we compare it with Rs 31,198 crore in the same quarter last year.
SBI has not only beaten its historical numbers, but it has also lived up to the expectations of the market.
Now let's talk about provisioning and asset quality.
See, provisions simply mean that the bank has already recognized its bad loans as a loss in its financial statements.
Remember, we are not considering tax in the provisions. There has been a sharp decline in SBI's provisions (other than tax) and contingencies.
It reached Rs 3,316 crore in the quarter as against Rs 7,237 crore in the same quarter last year.
The bank has halved the provision for non-performing assets or NPAs.
SBI has made provisions of up to Rs 1,278 crore for NPAs in Q4 FY23.
Friends, if a loan is taken from a bank and it is not able to pay back on the usage time or if it defaults on its loan,
then these loans are considered bad loans or NPA for the banks.
If you look at the asset quality of SBI, you will see a good improvement there too.
For the March quarter, the gross NPA level stood at 2.78% as against 3.14% in Q3FY23, and 3.97% in Q4FY22.
Talking about SBI's profitability, there has been a healthy 25% growth in SBI's operating profit for the March quarter,
with which the number has reached Rs 24,621 crore.
With this, the Company's CAR ie Capital Adequacy Ratio stood at around 14.68% at the end of FY23.
This capital adequacy ratio measures the financial strength of the banks.
Basically, it is the ratio of the riskiness of a bank's capital to its assets, which tells us about the bank's ability to bear losses.
That is, a high capital adequacy ratio means that the bank can withstand a reasonable amount of losses without any risk of failure.
Moreover, the bank's credit cost witnessed a YoY growth of 33 bps in the last quarter of FY23. Yes.
The credit cost of the bank stood at 0.16% in Q4FY23.
Credit cost means the charges incurred by the borrower in any credit or loan arrangement.
And interestingly, the growth numbers on the credit side of the bank are also healthy.
The bank witnessed 16% growth across the credit side,
with 12% YoY growth in corporate loans and 18% YoY growth in retail personal loans.
A significant boost for SBI has also been the fact that their deposits have seen a jump of 9% on a YoY basis.
SBI's Net Profit Crosses Rs 50,000 Crore In FY23!
The bank has recorded a profit of 50,232 crores, which is a growth of 58% on a year-on-year basis!
Let us see what the management has to say about these results.
Dinesh Kumar Khara who is the chairman of SBI was talking to the media after the unfortunate result.
Let us tell you what Dinesh Kumar Kharaji has to say about SBI's outlook on profitability, lending, credit growth, deposit growth, and asset quality.
The management expects ROA to be above 1% and ROE to be above 19% in the next financial year.
He believes that ROA performance of more than 1% in the last three quarters shows a positive trend.
The "mark-to-market" or MTM impact of the first quarter impacted ROA for the year, but he expects a substantial improvement.
Mark-to-market loss is the loss that is generated from the accounting entry and not because of the sale of any securities.
That means there should be a loss due to a fall in the current value of the portfolio. They say - paper loss!
As seen, the corporate sector lending growth has registered 12% and the management expects this momentum to continue in the next financial year as well.
They expect profit book growth to be in the range of 10% to 12% and loan book growth to be in the range of 12%-14% as expected by the management.
While deposit growth has lagged behind lending growth in a way, the bank has an SLR ie statutory liquidity ratio of around 4 trillion.
SLR is the minimum percentage of a deposit that every commercial bank has to keep in the form of liquid cash or gold as a regulatory requirement.
The credit deposit ratio of the bank in the domestic market is 65%.
This means he is in a position to grow their credit without significantly increasing his deposit cost.
On the asset quality side, the management expects to be able to maintain the present credit quality.
The bank's lowest-ever credit cost of 0.23% and net NPA of 0.67% shows that they have been able to maintain strong asset quality.
Now the management has given its outlook, but are the analysts satisfied?
Let us now tell you in brief what the analyst has to say about the latest SBI results.
Analysts at Jefferies attributed the growth in SBI's net profit to growth in NII and reduction in credit costs.
Challenges like low fee income, high operational expenses, and low growth CASA deposits are still standing in front of the bank like a Barrier.
And there Motilal Oswal's analysts have called these SBI results a mixed bag.
As per them, higher operating expenses have negatively affected the operating profit; and, margin expansion and decreased provisions drove earnings.
He believes that the ROA for FY25 can be 1% and the ROE can be 17.1%.
But, after so many bumper results, the share price of SBI fell below 2.5% after the result.
They say in Gujarati, “Bhav Bhagwan Chhe.”
Stock market experts say that SBI's results came in line with expectations and did not cause any surprise for the market.
meaning, the market had already priced in the SBI results!
So this was a brief analysis of SBI's Current Result.
Hope you liked this crisp analysis.
If yes, then tell us in the comment section which is your next company result time, and we will try to make a video on that company result.
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