Sharp decline in slippages, jump in Net Interest Income (NII) in July-September quarter sent State Bank of India’s stock soaring on the Dalal Street on Friday. Analysts termed Q2 earnings of the country’s biggest bank as “refreshing” turnaround after several quarters of dismal and worrying performance.
The stock shot up to top of the gainers lists of Bombay Stock Exchange and National Stock Exchange with intra-day highs of Rs 338.55 and Rs 338.50 respectively, nearly 7 per cent up,. Analysts say SBI’s Q2 performance changed the mood in Dalal Street to positive as not only Nifty Bank and Nifty PSU Bank jumped but also turned the benchmarks Sensitive Index and Nifty of BSE and NSE bullish facilitating positive end to the trade for the week. Bank sub index outperformed main indices.
SBI Chairman Rajnish Kumar declared softening of gross slippages for Q2 at Rs 10,627 crore, including Rs 9,026 crore fresh addition, which was sharply lower than Rs 30,059 crore in Q1 (June quarter) of the current financial year.
The fresh slippages in Q1 too were staggering at Rs 26,249 crore. But standalone profit of the top state run lender missed the market’s estimate as it dropped significantly 37 per cent year-on-year to Rs 1,581.55 crore from Rs 2,538.32 crore. Dalal Street was expecting SBI to show Rs 2,700 crore profit for Q2.
Nevertheless, the stock kept rising as the numbers were out on improving asset quality. The bank ascribed the drastic profit fall to higher provisioning for bad loans particularly of those defaulters who are being tried in the National Company Law Tribunal under the Insolvency and Bankruptcy Code. SBI has shown fall in gross NPAs at 9.83 per cent from 9.97 per cent QoQ. NII increased 27.3 per cent to Rs 18,585.9 crore in Q2 from Rs 14,600.2 YoY.
Indices were trading with downside bias since the start to Friday’s trade as investors and brokers were expecting major changes in Goods and Services Tax by the GST Council which was to end its two-day deliberation by afternoon. The earning season has not been as bad as it was in Q1 but measure relief in GST rates to small and medium enterprises and traders would serve as a fresh trigger for bulls to return to D Street on Monday.
The Sensex ended the week at 33,314.56 (+63.63) points, up 0.19 per cent. Broader market’s Nifty was flat at 10,321.75 (+12.80) points, gaining 0.12 per cent. Nifty Bank outperformed main indices as it closed 25,498.95 (+207.60) points, an increase of 0.82 per cent. Nifty PSU Bank as top gainer increased 4.32 per cent to settle for the week at 4,001.45 (+65.70) points.
In Sensex, 15 shares advanced and 16 declined. For Nifty the ratio was 22:28. Gainers in BSE benchmark included SBI Rs 333.15, 6.18 per cent, L&T Rs 269.90, 4.38 per cent, ICICI Bank Rs 318.70, 2.28 per cent and Axis Bank Rs 546.25, 1.42 per cent.