Q3 results positive for SBI shares, can drive further re-rating: Yes Securities
SBI reported a 15.5% growth in retail loans, helping drive an overall credit growth of 6.73% for the reported quarter
Shares of SBI today surged 5% to ₹353.9 after India's largest lender by assets reported a better-than-expected net profit in December quarter as retail lending growth recovered to pre-pandemic levels. SBI's earnings highlight a recovery seen in retail lending as the economy returns to normalcy after being hit by the virus outbreak, even as concerns around bad loans linger.
"Results are positive for the stock and can drive further re-rating," Yes Securities said in a note.
SBI reported a 15.5% growth in retail loans, helping drive an overall credit growth of 6.73% for the reported quarter.
"Loan growth was ahead of estimates at 3% qoq and 7% yoy - driven by sustained strong traction in retail portfolio (up 15.5% yoy) - including investments in Corporate Bonds & CPs (credit substitutes), the loan growth stood is at 8% yoy," Yes Securities said in a note.
Net profit fell to ₹5196 crore for the three months ended December 31, from a record profit of ₹5,583 crore on the back of resolution of some large bad loan accounts. Analysts had expected the company to report a profit of ₹4510 crore.
Net interest income rose 3.8%, while net interest margin, a key indicator of a bank's profitability, was flat at 3.34%, compared with the second quarter.
The bank's asset quality improved as the gross non-performing assets fell to 4.77% of the gross advances as of December 31, 2020 from 6.94% in the corresponding period a year ago.
In value terms, the gross NPAs or bad loans stood at ₹1,17,244.23 crore, as against ₹1,59,661.19 crore.
Likewise, the net NPAs were down 1.23% at ₹29,031.72 crore, as against 2.65% (at ₹58,248.61 crore).
Provisions for bad loans and contingencies for the quarter however spiked to ₹10,342.39 crore, from ₹7,252.90 crore a year earlier. (With Agency Inputs)
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