Saturday, August 13, 2011

SBI Q1 FY 2011-2012 Result and Valuation Analysis

The country's largest lender State Bank of India (SBI) registered a decline of 25% in its first quarter consolidated net profit to Rs 2,512.5 crore from Rs 3,365 crore in the year-ago period. 

The total income for the quarter under review was posted at Rs 39,126 crore from Rs 32,808 crore in the same quarter last year.

On standalone basis, net profit declined 45% to Rs 1,583.5 crore in Q1 from Rs 2,914.2 crore a year ago. However, the total income increased 25% to Rs 27,731 crore from Rs 22,142 crore.

The fall is mainly on account of higher provisioning. Total provisions for the bank shot up nearly three-fold or 168% Y-o-Y to Rs 4,157 crore of which provisions for non-performing assets accounted for Rs 2,782 crore compared with Rs 1,733 crore a year back.

In April this year, the Reserve Bank of India increased provisioning norms from 10% to 15% on sub-standard assets while restructured assets too have to be provided at 2% as against 0.25-1% earlier.
When a loan account stops repayment for 60 days, it is called sub-standard asset.

The stock ended down 2.5% to Rs. 2193 on Friday. 52 Week High Low for the stock is 3,515 / 2,123. At the current market price the stock enjoys a market valuation of approximately 140 thousand crores and is trading at a Price to Book valuation of around 2 times based on FY 12 expected book value.

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