SBI board approves $2 bn fundraise via offshore bonds; stock down

The shares of the State Bank of India (SBI) fell 0.40% in the early trade today, in sync with broader market, even after the executive committee of the SBI central board approved the raising of $2 billion through offshore bonds during FY 2023-24. SBI, in an exchange filing today, said: "To examine the status and decide on long-term fund-raising in single or multiple tranches up to $2 billion (US$ Two Billion) under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible currency during FY 2023-24.”

Amid the development, the shares of SBI opened a gap down at ₹544.45 against the previous closing price of ₹545.85 on the BSE. The banking heavyweight is currently down 0.40% at ₹543.40. The stock has risen 2.41% in the past week; 4.66% in the past month; 1.81% in the past six months; and 11.24% in the year-to-date period. At the current share price, SBI's m-cap stands at ₹4,84,874.17 crore.

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. The issue attracted an overwhelming response from investors, with bids of ₹4,537 crore, and was oversubscribed by about 2.27 times against the base issue of ₹2,000 crore.

Prior to this, the bank had raised Additional Tier 1 Bonds of ₹4,544 crore on 21st February 2023 at a spread of 71 bps over the corresponding FBIL G-Sec par curve on the date of bidding. 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.