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SBI Q1 profit up 25%; shares jump

SBI Q1 profit up 25%; shares jump
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First Published: Thu, Aug 12 2010. 02 06 PM IST
Updated: Thu, Aug 12 2010. 02 06 PM IST
Mumbai: State Bank of India (SBI), the country’s biggest lender, beat forecasts with a 25% rise in quarterly profit as net interest income improved, lifting its shares up as much as 6% to a record high.
SBI and rivals such as ICICI, India’s No. 2 lender, are seeing an improvement in asset quality as consumer loan defaults slow in an economy forecast to grow about 8.5% this fiscal year.
State-run SBI said on Thursday net profit rose to Rs2,914 crore ($621.3 million) in April-June from Rs2,330 crore a year earlier. A Reuters poll of analysts had forecast net profit to grow 5% to Rs2,449 crore.
“Net interest income is looking very good. Going forward, I think this growth should continue as, in a rising interest rate environment, SBI is best positioned in the sector,” Vaibhav Agrawal, an analyst at Angel Broking, said.
SBI’s shares jumped 6% to a record Rs2,760 following the results, outperforming the broader market that was up 0.1% at 2.10 p.m.
Bank credit in India grew at an annual 19.7% in July, according to the central bank’s data, in tune with a rise in business and consumer confidence, up from 9.7% in October and compared with 16.7% at end-March.
Analysts expect credit growth to gather pace in the second half of fiscal year 2011 as industries will need more funds to expand operations.
SBI’s net interest income grew 45.4% to Rs7,304 crore in the June quarter, from a year earlier, above forecasts of Rs6,595 crore for the period. Net non-performing assets at SBI were at 1.7% in April-June compared with 1.55% a year earlier. Last month, ICICI Bank’s met estimates with a nearly 17% rise in net profit while HDFC Bank, the second largest private lender in India, posted its strongest profit growth in more than a year.
Shares in SBI, valued at about $36 billion, have risen about 15% so far this year, versus a 4% rise in the main index, and a 19% jump in the sector index.
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First Published: Thu, Aug 12 2010. 02 06 PM IST