State Bank of India’s growth trajectory remains intact even as India’s largest lender delivered some negative surprises in the first quarter, analysts said.
SBI reported a net profit of Rs 6,068 crore for the quarter ended June, down 6.7% year-on-year. That compares with the Rs 8,392-crore consensus estimate. The drop in profit was largely due to mark-to-market losses recorded during the quarter, as the bank had to provide against rising bond yields.
Net interest income improved 12.87% year-on-year to Rs 31,196 crore, while other income fell 80%. Its asset quality remained stable, with gross non-performing asset ratio at 3.91%. But quarterly additions to bad loans rose 180% quarter-on-quarter to Rs 10,115 crore.
Total domestic advances rose 13.66% to Rs 24.5 lakh crore, driven by an improvement in SBI’s retail loan book. Total deposits were up 8.7% year-on-year at Rs 40.45 lakh crore.
Shares of SBI were trading 3% down as of 9:30 a.m. on Monday. Of the 50 analysts tracking the bank, 49 suggest a ‘buy and one recommends a ‘hold’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 24.6%.