With the banking behemoth SBI putting up a better show than what the market was anticipating, the market gave a thumbs up to the stock with the bank’s shares hitting a new 52-week high and lifting along the way a few other PSU bank stocks in the CNX Bank Nifty to new yearly highs.
Investor enthusiasm for the bank stocks could be understood from the fact that in a matter of about 35 minutes, the Bank Nifty’s gains soared from 162.70 points to about 230 points by the time the market closed for the day with four PSU banks touching new yearly highs today along with private sector Federal Bank.
SBI had posted a Q4 (2013-14 FY) profit of Rs 3,041 crore which was lower than the profit the bank had earned in the corresponding quarter in the previous year of Rs 3,299 crore. But it was better than what the market was expecting. The overall show of the bank had a positive impact on the bank counters in general and SBI in particular with the stock making a gain of over Rs 250.
Asset quality
Overall, there was an improvement in the asset quality as bad loans declined from the December quarter. Fresh slippages came down from Rs 11,438 crore to Rs 7,947 crore sequentially.
On a sequential basis, the gross NPA (non-performing assets) ratio fell to 4.95 per cent from 5.75 per cent and net NPA ratio also improved to 2.57 per cent from 3.24 per cent as a percentage of total loans.
This reports an improvement in the gross and net NPAs by 20 basis points and 47 basis points, respectively.
Upgradation was higher at Rs 5,054 crore against Rs 1,230 crore and recoveries also improved to Rs 3,389 crore compared with Rs 1,538 crore sequentially.
Though the country’s largest bank reported a drop in net profit by 8 per cent to Rs 3,041 for the three-month period ending March 31, 2014, (Rs 3,299 crore in March last year), it beat market expectations.
During the quarter, the public sector bank’s net interest income (interest earned minus interest expended) rose 16 per cent year-on-year to Rs 12,903 crore from Rs 11,078 crore for Q4FY13.
Stock movement
The country’s premier bank appeared to have shaken off all the negative sentiments because of high NPAs etc during the year with the stock nearly doubling from its 52-week low and reaching a new yearly high of Rs 2,777 before closing marginally lower at Rs 2,769.80, a gain of Rs 258.15 or 10.28 per cent, today. The stock had slumped to a 52-week low of Rs 1,452.70 on August 28 last year.
The SBI stock’s performance had a positive impact on other major PSU banks figuring in the CNX Bank index with four others making significant gains and three of them reaching new 52-week highs.
Canara Bank was the biggest gainer in terms of percentage with the stock up by Rs 57.25 or 13.80 per cent to Rs 472. Bank of India closed at Rs 347.25, a gain of Rs 24.90, PNB gained Rs 50.40 to close at Rs 1,035.50 and BoB jumped by Rs 31.15 to close at Rs 956.25.
Three other PSU banks in the bank index joined SBI in touching new yearly highs - Canara Bank (Rs 480.40), BoI - Rs 353 and PNB - Rs 1,043.60.
Among the private sector banks in the Bank Nifty, only Axis Bank and ICICI Bank made noteworthy gains. Axis Bank closed at Rs 1,869, a gain of Rs 27.35 and ICICI Bank closed at Rs 1,465, a gain of Rs 13.50.
However, three private banks - IndusInd Bank, HDFC Bank and Kotak Mahindra Bank closed marginally in the red.