Moderate Income and Estimates Missed: SBI Numbers Guys BSE Bankex 7

After falling 1,255 points on Thursday, the BSE Bankex lost more ground on Friday as it fell 498 points, taking its total market capitalization to Rs 1.1 trillion.

The slide began on Friday when State Bank of India (SBI) missed Q4FY22’s net profit of Rs 9.113.53 crore to Bloomberg’s estimate of Rs 10,180 crore. Net interest margins have seen only a slight sequential increase. Lender slips increased from Rs 2,334 crore to Rs 2,845 crore in the December 2021 quarter, gross non-performing assets (NPA) ratio of 53 bps gradually narrowed to 3.97% and net NPA ratio decreased by b2020%. However, it has set aside Rs 3,260 crore as bad debt provision, which is about 5% more than Quantum in the December 2021 quarter. The stock ended the session down 3.8% at Rs 445.05.

Banking stocks have already hit sentiment after Punjab National Bank (PNB) reported a weak set of earnings with a 65% year-on-year drop in net profit due to a 35% increase in credit costs. Slippage jumps sharply to about 6% annually, significantly surpassing recovery. Net interest income (NIM) increased by a whopping 5%. The stock plunged to Rs 28.60 on Thursday from a previous close of Rs 33.1.

Although debt growth has been reasonably good for most state-owned lenders, some have reported large slippage and provided higher debt losses suggesting that the balance sheets are much stronger but still not fully cleared. There are concerns among analysts that rising interest rates – a large portion of loans linked to repo rates – could stifle demand for loans.

Although Bank of Baroda (BoB) saw a change with net profit of Rs 1,779 crore for the March quarter, with a loss of Rs 1,047 crore in Q4FY21, these were supported by tax benefits. On Friday, lenders reported a good increase in 21% yoy net interest income, although NIM had a gradual decline of about seven bps. Other income was 72% lower in the year. Prior to the results, the stock closed 1.1% lower at Rs 95.

Again, Union Bank of India on Friday posted a strong 25% increase in NIIs to an annual growth of 8.3% net profit of Rs 6,769 crore to Rs 1,440 crore.
The value of slips was Rs 5,672 crore in the March quarter, up from Rs 3,411 crore in the December 2021 quarter. Provision has been reduced by 2% yoy to Rs 3,618 crore. However, margins were under pressure and fell 25 bps to 2.75% in Q4FY22. As part of the overall progress, Gross NPAs decreased by 51 bps on a hierarchical basis to 11.11% and net NPA ratio decreased by 41 bps to 3.68%.

Last week, Canara Bank (CBK) reported mixed operating performance with NII up 25% and fresh slips up Rs 4,740 crore. Lender’s net interest margin increased by 10 bps to 2.9%.

Healthy recovery, upgrades and write-offs have helped the bank to declare better asset quality. The GNPA ratio rose 29 bps to 7.51%, while net NPA rose 21 bps to 2.65%.