SBI shares slumped 5% despite strong growth in Q4 profit; here's why

Shares of State Bank of India (SBI) dropped nearly 5% in intraday trade on Friday soon after the country’s largest lender released fourth quarter earnings which missed Street estimates. The PSU lender has reported double digit growth in its top and bottom line, albeit it failed short of market expectations. The board of SBI has also approved dividend of ₹7.10 per share for the financial year 2022 (FY22).

Earlier today, SBI shares opened higher at ₹470, in sync with benchmark index Sensex, and gained as much as 3.15% to hit an intraday high of ₹477, against the previous closing price of ₹462.45 on the BSE. However, the index heavyweight fell sharply following the earnings announcement and declined as much as 4.85% to touch a low of ₹440. The stock fell 7.75% from the day’s high of ₹477, before closing at ₹445.05, down 3.76% on the BSE. The stock hit a 52-week high of ₹549.05 on February 7, 2022, and a 52-week low of ₹359.60 on May 14, 2021.

On the volume front, there was a surge in selling as 21.63 lakh shares worth ₹100.32 crore changed hands over the counter as compared to two-week average of 7.62 lakh stocks.

SBI shares have delivered 21% returns to its shareholders in the past one year, 45% in three years, and 50% over a five years period. However, the stock seemed to have lost momentum and has fallen 3% on a year-to-date (YTD) basis, 14% in a month, and 8% in the past one week.

The state-owned lender on Friday reported a 41% year-on-year surge in net profit at ₹9,113.53 crore for the quarter ended March 2022, as against ₹6,450.75 crore in the same quarter a year ago. The bank’s net interest income jumped 15% to ₹31,198 crore in Q4FY22, compared with ₹27,067 crore in the corresponding period last year. Both net profit and net interest income were lower than Street estimates.

On the asset quality front, the bank’s gross non-performing asset (GNPA) as a percentage of total advances ratio stood at 3.97% at the end of the fourth quarter compared with 4.5% as of December 31, 2021. Net NPA ratio too improved 32 basis points on a quarterly basis to 1.02%. Provisions for the quarter dropped 34.5% year-on-year to ₹7,327 crore. However, on a sequential basis, the provisions rose from ₹6,974 crore in December quarter.