SBI shares fall 5% post strong Q1 amid global sell-off

Shares of public lender State Bank of India (SBI) fell 5.5% today despite recording in-line quarterly numbers in the April-June period. The decline in SBI shares was in sync with the broader market, with most of Sensex pack ending in negative terrain amid weak global cues.

Early today, SBI shares opened at ₹847.90 and hit the day's low at ₹801.05 before recovering to ₹831.40 on the BSE. The scrip is trading below its one-year mark of ₹912.10 hit on June 3, 2024. At the current share price, SBI's m-cap stands at ₹7.24 lakh crore.

The market capitalisation of BSE-listed companies plunged nearly ₹17 lakh crore to ₹440.04 lakh crore today as domestic benchmark index Sensex crashed as much as 2,686 points, or 3.3%, while the NSE Nifty dived 760 points, or 3.08%, to slip below 24,000 mark to 23,957. BSE Bankex was down 2.72% or 1,591 points at 56,903 (3.29 pm). The unwinding of Yen carry trades, U.S. recession fear, geopolitical tensions in the Middle East, higher valuation of Indian equities and sell-off in global equities are prime reasons attributed to a plunge in benchmark indices today.

In the past year, the SBI share has risen 43.10% and its calendar year return stands at 26.75%. In the six months, the share has risen 26.45%. SBI, which released its April-June quarter results on August 3, 2023, reported a net profit of ₹17,035 crore, witnessing a growth of 0.89% YoY. Its operating profit grew by 4.55% YoY to ₹26,449 crore. The bank’s return on assets (ROA) and return on equity (ROE) for Q1FY25 stood at 1.10% and 20.98% respectively. The net interest income (NII) surged 5.71% YoY, while the whole bank net interest margin (NIM) was 3.22% and domestic NIM was 3.35%.

In terms of the balance sheet, the bank's credit growth was at 15.39% YoY with domestic advances growing at 15.55% YoY. Its foreign offices’ advances grew 14.41% YoY and domestic advances growth was driven by SME advances (19.87%), followed by agri advances at 17.06%.

In retail, personal advances and corporate loans registered YoY growth of 13.60% and 15.92%, respectively. The CASA deposit grew by 2.59% YoY, while the CASA ratio was at 40.70% as of June 30, 2024. In terms of asset quality, the gross NPA ratio stood at 2.21%, improved by 55 bps YoY, while the net NPA ratio at 0.57% improved by 14 bps YoY.

India's largest bank is led by Dinesh Kumar Khara, who will be superannuating as its chairman by the end of this month. Khara's tenure as SBI chairman ended in October 2023, though it was extended by one year till August 28, 2024. Khara will most likely be succeeded by SBI MD Challa Sreenivasulu Setty.

As per SBI's CFO Saloni Narayan, under Khara's leadership for four years between October 2020 and June 2024, SBI earned more profit (₹1.63 lakh crore) than ₹1.45 lakh crore earned in the previous 65 years. However, the bank under him missed the ₹1 lakh crore target in revenue as SBI's annual revenue stood at ₹0.84 lakh crore in the fiscal year ending March 2024.