State Bank Of India: Q1FY15 Result Analysis

Net profit of SBI increased for the first time in last six quarters and was up by 3.3% on yearly basis to Rs 3349 crore for Q1FY15. This was marginally above the street expectation of around Rs 3250 crore. The rise in profit was helped by better net interest income growth and lower operating expenses. However, other income, provisions & contingences and tax expenses adversely impacted the net profit. 

Net interest income (NII) of the bank came marginally higher than the consensus street estimates. The street was expecting NII of Rs 13200 crore whereas the bank posted NII of Rs 13252 crore, which was higher by 15.1% on yearly basis. Operating expenses of the bank increased by mere 3.9% on yearly basis to Rs 11868.62 crore for Q1FY15. All this helped operating profit of the bank to increase by 16.4% on yearly basis to Rs 8787.74 crore for Q1FY15. Nevertheless, rise in tax expenses and provisions & contingencies limited the profit growth of the bank. Provisions & contingencies of the bank increased by 72.3% on yearly basis to Rs 3903 crore while tax expenses increased by 34.41% in the same duration. 

Asset quality of the bank remained stable for the quarter. In absolute terms gross non-performing assets (NPA) of the bank has declined marginally by 1.9%, sequentially to Rs 60434 crore. While net NPA of the bank increased by 2.5% in the same duration to Rs 31883 crore. As percentage of advances, gross NPA has declined marginally by 5 basis points whereas net NPA increased by nine basis points on sequential basis. 

The result of the bank came during market hours and stock closed 0.9% down from its previous close to Rs 2415, which is 1.2x its book value.