The views of Mr. Vaibhav Agrawal (VP Research- Banking) on SBI Result:
“State Bank of India (SBI) announced moderate set of numbers for the quarter, which came largely on expected lines. While NII declined by 5 % y o y, non-interest income grew at modest 5 % y o y. As guided by the management earlier, the bank has provided around Rs. 950 cr for wage revisions and other employee benefits during the quarter.
Operating expenses for the bank expectedly grew by 20 % y o y. The bank’s provisioning expenses grew by 33 % yoy, as the bank witnessed higher write-offs during the quarter (to take tax benefits, in-line with what seen in other PSU banks). Overall, earnings declined by 19 % yoy, in-line with what we had estimated. The banks performance on the asset quality front, with slippages at around Rs. 6,000 cr and incremental restructuring at about Rs. 8,700 cr, also came on the guided lines.
Overall, the bank reported improvement in the asset quality, as absolute Gross NPA levels declined sequentially by 4 % (primarily due to sequentially lower slippages and healthy recoveries / upgrades).
We await the guidance of the management on the asset quality outlook, going forward. Till then, we would maintain our target price on the stock, which would now represent a Buy rating (as the stock has recently corrected).”
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