Modest profits and missed estimates: SBI figures single out BSE Bankex

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After falling 1,255 points on Thursday, the BSE Bankex lost further ground on Friday dropping 498 points, wiping out a total market cap of Rs 1.1 trillion.

Friday’s slide began after the State Bank of India’s (SBI) net profit of Rs 9,113.53 crore for Q4FY22 missed Bloomberg’s estimate of Rs 10,180 crore. The net interest margin only increased slightly sequentially. As lender slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December 2021 quarter, gross non-performing assets (NPA) ratio declined by 53 basis points sequentially to 3.97% and the net NPA ratio decreased by 32 basis points to 1.02%. However, it set aside Rs 3,260 crore as provisions for bad loans, about 5% higher than the December 2021 quarter quantum. The stock ended the session down 3.8% at Rs 445 .05.

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Sentiment in banking stocks had already been hit on Thursday after the Punjab National Bank (PNB) reported a poor earnings streak with a 65% year-on-year decline in net profits due to a 35% rise in costs of banking. credit. Slippages jumped sharply to around 6% annualized, significantly outpacing reversals. Net interest income (NIM) increased 5% year-on-year. The stock crashed to Rs 28.60 at Thursday’s close from the previous close of Rs 33.1.

While loan growth has been reasonably good at most state-owned lenders, some have reported larger slippages and built up higher loan loss provisions, suggesting that balance sheets, although much solid, are not yet completely cleaned. Analysts fear that rising interest rates – given that a large share of lending is tied to the repo rate – will dampen demand for credit.

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While Bank of Baroda (BoB) saw a turnaround with net profit for the March quarter reaching Rs 1,779 crore from a loss of Rs 1,047 crore in Q4FY21, these were supported by tax benefits . The lender on Friday reported a healthy increase in net interest income of 21% year-on-year, although there was a sequential decline in the NIM of around seven basis points. Other income was down 72% year-over-year. Before the results, the stock closed down 1.1% at Rs 95.

Again, Union Bank of India on Friday reported an 8.3% year-on-year rise in net profit to Rs 1,440 crore on the back of a strong 25% growth in NII to Rs 6,769 crore.
The value of slippages in the March quarter was Rs 5,672 crore, higher than Rs 3,411 crore in the December 2021 quarter. Provisions fell by 2% year-on-year to Rs 3,618 crore. However, margins were under pressure and fell 25 basis points sequentially to 2.75% in Q4FY22. Asset quality improved as gross NPAs as a share of total advances fell 51bps sequentially to 11.11% and net NPAs ratio fell 41bps to 3 .68%.

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Last week, Canara Bank (CBK) reported a mixed operating performance with NII growing 25% YoY and further slippages to a hefty Rs 4,740 crore. The lender’s net interest margin increased 10 basis points sequentially to 2.9%.

Healthy recoveries, upgrades and write-offs helped the bank report better asset quality. The GNPA ratio improved by 29 bps qoq to 7.51%, while the net npa improved by 21 bps to 2.65%.

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