State Bank Of India Post Better Than Expected Numbers

State Bank of India (SBI), India's largest lender, posted better than expected numbers in its fourth quarter of last fiscal (FY14). Although, the net profit of the bank was down by 7.8% on yearly basis to Rs 3040.74 crore for Q4FY14, it was way above what market was estimating, a fall of 14.7% in the net profit. Such performance was helped by the better show in net interest income, other income and fall in employee cost. 

Net Interest income of the bank has increased by 16.5% on yearly basis to Rs 12902 crore for Q4FY14. This growth, however, was lower than the street expectation of 17.6%. Retail portion of the bank performed better and helped the bank to lift the performance, while the corporate part saw a subdued performance. Other income of the bank, which is around 15% of the total income, grew by 18.7% on yearly basis to Rs 6585.65 crore for quarter ending March 2014. Employee cost of the bank saw a decline of 6% on yearly basis to Rs 5279.16 crore for Q4FY14.

Regardless, the best improvement in the performance of the bank was visible in its asset quality. In absolute terms, gross non-performing assets (NPA) and net NPA of the bank declined by 9% and 16% respectively on sequential basis. Even, fresh slippages during the quarter were down by 30% on sequential basis to Rs 7947 crore for January -March 2014 quarter. As proportion to gross lending and net lending the gross NPA and Net NPA has came down by 78 basis points and 67 basis points respectively to 4.95% and 2.57% on sequential basis. 

The bank has declared a dividend of Rs 30 per share for the financial year ended March 31, 2014. 

The better than expected performance of the bank especially in the asset quality front helped the shares of the bank to gain 9.69% in today's trade and closed at Rs 2755, its yearly high. The current share price of the bank discounts the book value of the bank by around 1.8 times.