SBI tops Sensex losers’ chart despite record profit in Q1; here’s why

State Bank of India (SBI), the country’s largest commercial lender, emerged as top loser in the BSE Sensex pack on Friday even after the PSU bank posted highest-ever net profit for the fourth quarter in succession. According to market analysts, the public sector lender reported better than expected profit in June quarter, but net interest income missed estimates, while fresh slippages more than doubled sequentially.

SBI shares ended 2.94% lower at ₹573.25 apiece on the BSE today. Early today, the banking heavyweight opened higher at ₹594.90 against the previous closing price of ₹590.60 and gained as much as 1.3% to hit an intraday high of ₹598.50 ahead of Q1 numbers. Post earnings report, the largecap stock slipped into negative terrain and declined 3.2% to touch its day’s low of ₹571.50 amid surge in selling activities in the last few hours of the trade. On the volume front, 27.42 lakh shares changed hands over the counter compared to two-week average volume of 6.36 lakh stocks. The market capitalisation slipped to ₹5.11 lakh crore.

In contrast, the BSE Sensex ended 480 points, or 0.74%, higher at 65,721 levels, with 18 of 30 constituents ending in positive terrain. The BSE Bankex index settled 0.66% higher, with most of the index heavyweights, barring SBI and Bank of Baroda, closed in green zone.

At current price level, SBI shares trade 9% lower than its 52-week high of ₹629.65 touched on December 15, 2022. The stock has risen nearly 15% in the last six months after hitting its 52-week low of ₹499.35 on February 1, 2023. The counter had given 8% returns in the last one year, while it has fallen over 6% in the calendar year 2023. In the past one month, SBI shares slipped nearly 3%, while it lost over 7% in a week.

SBI in an exchange filing said that it has reported a 178.25% jump in its net profit to ₹16,884 crore for Q1 FY24 as compared to ₹6,068 crore during the same period last year. The net interest income (NII) rose 24.71% to ₹38,905 crore as compared to ₹31,196 crore in the same period last year.

On the asset quality front, SBI's gross NPA (net performing asset) ratio stood at 2.76% as of June 30, 2023, down by 115 bps YoY, while the net NPA ratio was recorded at 0.71%, down 29 bps on a year-on-year basis.

During the quarter under review, provisions stood at ₹2,501 crore as against ₹4,392 crore last year. Fresh slippages for the quarter stood at ₹7,659 crore, which was more than double from ₹3,185 crore in Q4 FY23, but lower by 21.37% from ₹9,740 crore last year.

Analyst at Prabhudas Lilladher said that NII was lower as compared to estimation of ₹39,500 crore due to softer loan growth, but net interest margin (NIM) was in line at 3.20% versus estimates of 3.22%. 

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