SBI raises ₹10,000 cr via infra bonds; here’s how stock reacted

Shares of State Bank of India (SBI), the country’s largest lender, remained in focus on Thursday after the lender raised ₹10,000 crore through 15-year infrastructure bonds priced at a coupon rate of 7.36%. This is the sixth infrastructure bond issuance by the public sector bank, which received an overwhelming response from investors as the bid was oversubscribed 3.6 times. With this issuance, the total outstanding long-term bonds issued by the bank stands at ₹59,718 crore. The bonds will be listed on domestic bourses - BSE and NSE.

Cheering the news, SBI shares opened 0.65% higher at ₹854.70 after ending 1.4% lower at ₹849.10 in the previous session on the BSE. In the early trade, the banking heavyweight gained as much as 0.86% to ₹856.45, while the market capitalisation rose to ₹7.64 lakh crore.

SBI shares touched a 52-week high of ₹912.10 on June 3, 2024, while it hit a 52-week low of ₹543.15 on October 26, 2023. The PSU bank has delivered 45% returns to its shareholders in the last one year, while it rallied nearly 38% in the past six months, thanks to improvement in credit matrix and robust financial performance. In the calendar year 2024, SBI share price moved up by 33%, while it added over 2% in the past one month.

In an exchange filing last evening, SBI said that it raised ₹10,000 crore through senior unsecured long term bond issuance, which saw participation from investors across sectors such as provident funds, pension funds, insurance companies, mutual funds, corporates etc. The instrument is rated ‘AAA’ with stable outlook.

As per the bank, the proceeds of bonds will be utilised for funding infrastructure and affordable housing segments.

“The issue attracted overwhelming response from investors with bids in excess of ₹18,145 crore and was oversubscribed by around 3.6 times against the base issue size of ₹5,000 crore. The total number of bids received was 120 indicating wider participation with heterogeneity of bids,” the release notes.

“Based on the response, the Bank has decided to accept ₹10,000 crores at a coupon rate of 7.36% payable annually for a tenor of 15 years,” it adds.

SBI Chairman Dinesh Khara said that this issuance will help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.  This issuance is also very significant as the bank has been successful in raising long duration bonds successively.

In September last year, SBI raised ₹10,000 crore through 15-year infrastructure bonds priced at a coupon rate of 7.49%. The bonds had a base issue size of ₹4,000 crore and a greenshoe option of ₹6,000 crore.

For the fourth quarter ended March 31, 2024, SBI reported a standalone net profit of ₹20,698.35 crore, up 24% year-on-year (Y-o-Y), driven by higher interest income and low provisions. Sequentially, the profit surged 125% from ₹9,163.96 crore in the December quarter of FY24 (Q3 FY24). For the entire financial year, net profit stood at ₹61,077 crore, up 21.59% YoY, after accounting for wage settlement and one-time exceptional item of ₹7,100 crore.

The net interest income (NII) of SBI was up 3% YoY to ₹41,656 crore in Q4 FY24, from ₹40,392.5 crore in the same period last year. The net interest margin (NIM) improved to 3.30% from 3.22% QoQ. It stood at 3.60% in Q4 FY23. 

The board of SBI also declared a dividend of ₹13.70 per equity share for the financial year ended March 2024.

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