SBI stock trading lower as bad loans rise in Q3

SBI stock trading lower as bad loans rise in Q3

BOI stated that the bank made provision of Rs 549.29 crore as of December 2017, for the first list of wilful defaulters identified by RBI on June 23, 2017 for Insolvency & Bankruptcy Code (IBC) Act.

Provisions and contingencies were higher YoY as well as QoQ, but provisions for non-performing assets declined 39 percent quarter-on-quarter and 29.5 percent year-on-year to Rs 385.48 crore for quarter ended December 2017.

A day before the quarterly results ending December 2017 was declared, a group of analysts surveyed by a global business platform were predicting a profit of Rs 2,060 crore.

Other income or non-interest income slipped 8.5 percent to Rs 548.85 crore and operating profit increased 18.4 percent to Rs 1,209.2 crore compared to year-ago.

On the capital adequacy ratio, Kharat said it was 12.44 per cent as on December 31, 2017.

Gross NPAs spiked 30 per cent to Rs 64,249 crore over the previous quarters, while net NPAs shot up 53 per cent to Rs 36,117 crore.

In percentage terms, gross NPA of BOI is at 16.93% this quarter versus 13.38% in Q3FY17 and 12.62% of Q2FY18.

Net interest margin (NIM) - a key measure of profitability - fell 33 bps y-o-y and 27 bps sequentially to 1.88 per cent in Q3.

State Bank of India (SBI) saw its stock fortunes slide on Monday with a drop of almost 4 per cent after the lender reported its first quarterly loss in 17 years.

With this, there was divergence also recorded in provisions as of March 2017. Among the smaller banks, Andhra Bank reported a Rs 532- crore loss and Bank of Maharashtra was in the red by Rs 596 crore.

"We have marginally modified our legacy estimates for FY18/FY19 and retained Buy rating on SBI, decreasing our target price to Rs 364 (from Rs 386 earlier), valuing the stock at 1.4x FY20E P/ABV and Rs 65 for subsidiaries", the brokerage said.