State Bank Q2 net up 40%, beats forecast

State Bank Q2 net up 40%, beats forecast
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First Published: Mon, Oct 27 2008. 11 55 AM IST
Updated: Mon, Oct 27 2008. 11 55 AM IST
Mumbai: Shares in State Bank of India <SBI.BO> tumbled 13% to 1-“ year lows on Monday on worries about bad debt provisions even after the country’s largest bank beat forecasts with a 40.4% rise in net profit.
Provisions for bad debts rose to Rs9.11 billion ($182 million) in the fiscal second quarter ended September from Rs2.47 billion in the previous quarter, although net non-performing assets fell to 1.34% from 1.42% in the previous quarter.
“The slippages are a cause for concern given the economic slowdown. Going forward the market is convinced SBI may not be able to get the best out of its other revenue streams,” VK Sharma, head of research at Anagram Stock Broking said.
SBI shares touched a low of Rs1,006.10, their weakest since April 2007,in morning deals. The shares were trading 10.6% to Rs1,033 in a Mumbai market that was down 6.4%.
ICICI Bank, India’s second-largest bank, reports its quarterly results later on Monday.
State-run SBI, which raised $4.1 billion in a rights issue in March, said July-September net profit rose to Rs22.6 billion from Rs16.1 billion a year earlier.
A Reuters poll of analysts had forecast a 16% rise in fiscal second-quarter earnings to Rs18.70 billion.
Net interest income, the difference between interest earned and interest expended, rose 45 percent to Rs54.56 billion.
Treasury income, primarily from trading in bonds, rose by a third to Rs43.14 billion.
State Bank, which has more than 10,000 branches across India and overseas, has the lowest cost of funds among the nation’s lenders. The bulk of its funds come from savings bank deposits that cost about 3.5% in annual interest payments.
Shares in State Bank rose 32 percent in July-September, easily outperforming a 4.5% drop in the main share index, but are down around 30% in October.
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First Published: Mon, Oct 27 2008. 11 55 AM IST