SBI replaces RIL as most profitable company in Q2; stock hits all-time high

Shares of State Bank of India (SBI) rallied nearly 5% to hit a fresh all-time high in early trade on Monday after the country’s largest lender reported better-than-expected earnings for the September quarter of the current fiscal (Q2 FY23). The PSU lender posted its highest-ever quarterly profit after tax (PAT) during the quarter under review, driven by strong loan growth and improved asset quality. On a consolidated basis, the bank posted a profit of ₹14,752 crore and became the most profitable company during the quarter under review, beating Reliance Industries having net earnings of ₹13,656 crore.

Cheering Q2 earnings, the SBI share price opened 3.4% higher at ₹614, against the previous closing price of ₹593.75 on the BSE. Extending opening gains, the banking heavyweight rallied 4.9% to hit a fresh all-time high of ₹622.90, driven by strong volume trade. A total of 8 lakh shares changed hands over the counter on the BSE against the two-week average volume of 5.93 lakh stocks. The market capitalisation climbed to ₹5.52 lakh crore. In comparison, the BSE Sensex was up 33 points at 60,983 levels.

The share price of state-owned bank has gained nearly 18% in a year, compared with a 0.75% rise in the benchmark index Sensex. On the year-to-date (YTD) basis, the largecap counter surged 31%, while it rose 30% in six months, and 16% in the last six months. The stock has risen 32% over eight months, from its 52-week low of ₹425 on March 8, 2022.  

For the July-September quarter of the current financial year (Q2 FY23), SBI posted a standalone quarterly profit after tax (PAT) of ₹13,264.62 crore, up 74% year-on-year (YoY) from ₹7,626.57 in the year-ago period. The total income rose to ₹88,733.86 crore, up 14% from ₹77,689.09 crore in the corresponding quarter last year.

The net interest income stood at ₹35,183 crore, up 12.83% from ₹31,184 crore in the year-ago period. Domestic net interest margins (NIMs) improved by 5 basis points on a YoY basis and 32 basis points on a QoQ basis to 3.55%.

On the asset quality front, gross non-performing assets (NPAs) declined to 3.52%, from 3.91% in Q1FY23 and 4.9% in Q2FY22. Similarly, net NPAs fell to 0.8% as against 1% and 1.52% in Q1 FY23 and Q2 FY22, respectively.

During the quarter under review, the PSU lender reported credit growth at 19.93% YoY with domestic advances growing by 18.15% YoY. The foreign offices’ advances grew 30.14% on a yearly basis.

In a post earnings press briefing on Saturday, SBI Chairman Dinesh Khara said that the bank is targeting double-digit loan growth between 14-16% in the current financial year. “This quarter was a busy season. That is why we had a strong credit growth. But I still expect, going by the current trend, we should have credit growth of 14-16% in the current financial year,” he said.

SBI, in its earnings report, said that the domestic credit growth was driven by corporate advances, which grew 21.18% YoY, followed by retail personal advances by 18.84% YoY. SME and agriculture loans registered YoY growth of 13.24% and 11%, respectively.