SBI board to consider $2bn fundraise in FY24; shares rise 2%

Shares of State Bank of India (SBI) climbed nearly 2% in opening trade on Tuesday, a day after the country’s largest lender unveiled a plan to raise $2 billion through offshore bonds. The bank’s executive committee of the central board is scheduled to meet on April 18, 2023, to consider fundraising up to $2 billion in single or multiple tranches during the financial year 2023-24. The capital will be raised through a public or private placement of senior unsecured notes in U.S. dollars or any other convertible foreign currency.

“The executive committee of the central board is scheduled to have a meeting on April 18, 2023, to consider, inter alia, the following: 'To examine the status and decide on long term fund raising in single / multiple tranches of up to $2 billion, through a public offer and/or private placement of senior unsecured notes in U.S. dollar or any other convertible foreign currency during the financial year 2023-24,” SBI said in a regulatory filing on April 10.

Reacting to the fundraising plan, shares of SBI opened 0.8% higher at ₹530.55 against the previous closing price of ₹526.30 on the BSE. Extending opening gains, the banking heavyweight rose as much as 1.75% to ₹535.5, while the market capitalisation climbed to ₹4.77 lakh crore. In comparison, the BSE Bankex index was up 1.2%, while the BSE Sensex was trading 275 points, or 0.46%, higher at 60,121 levels.

At the current level, SBI share price is down 15% from its 52-week high of ₹629.65 touched on December 15, 2022, while it is up over 24% against its 52-week low of ₹430.80 hit on June 20, 2022. The PSU bank has delivered a muted return of 4% in the last one year as compared to 8.5% gain in the BSE bankex index and 2% growth in the Sensex. In the last six months, the counter has risen 5%, while it has fallen nearly 2% in the calendar year 2023. The stock has added 3% in a month and 2.5% in a week.

Last month, the Dinesh Khara-led public sector lender raised ₹3,717 crore through Tier 1 bond at a coupon rate of 8.25%. This was SBI's third Tier 1 bond issuance for the fiscal year 2022-23. The lender intended to use the fund to augment its overall capital base and strengthen the bank's capital adequacy ratio.

In February this year, SBI raised $1 billion in its largest syndicated social loan for onward lending to ESG projects, affordable housing and self-help groups (SHGs).  

Besides, the lender raised ₹10,000 crore through its maiden infrastructure bond issuance in December 2022. This was touted to be the largest single infrastructure bond issued by any bank in the country.

For the December quarter of fiscal FY23, SBI reported its “highest-ever quarterly” net profit at ₹14,205 crore, up 68.47% on a year-on-year basis from ₹8,431.9 crore in the December quarter of 2021. The robust growth in quarterly profit was attributed to strong growth in its core income and a reduction in provisions.

The public sector lender’s operating profit surged 36.16% YoY to ₹25,219 crore, while the net interest income (NII) increased 24.05% YoY to ₹38,069 crore from ₹30,687 crore. The interest income for the quarter stood at ₹86,616 crore, up 24.31% on yearly basis.

On the asset quality front, gross non-performing assets (NPAs) dipped 136 bps YoY to 3.14% of its total advances in Q3 FY23, from 4.5% in the year-ago period. The net NPA also fell 57 bps YoY to 0.77% as compared to 1.34% in the year-ago quarter. The total provisions dipped 17% to ₹5,761 crore, while provisions against NPAs nearly halved to ₹1,586.47 crore. Its provision coverage ratio as of Q3 FY23 stood at 76.12%, up 490 bps YoY.