Tuesday, May 17, 2011

SBI Results.

The market remained in the red, lackluster, aimless and without direction. Then came the real bad news which the market was looking for. The poor performance of SBI. The largest PSU bank of India showed a pitiable Rs.21 crore net profit for Q4FY11. One can never fathom that a bank of the size and stature of SBI will come with such a small net profit. Numbers were expected to be under pressure, but no one expected it to be so bad. Higher provisioning did it in.

Total provisioning stood at Rs.4157crore v/s Rs.2349 crore (YoY). Provisioning for NPA was at Rs.3264 crore v/s Rs.2187 crore. Net NPA was at 1.63% v/s 1.72% and Gross NPA 3.28% v/s 3.05% (YoY). What also added on to the shocker was the NII, which rose 20% at Rs.8058 crore as against expectations of a rise of at least 35%. Worrying is the fact that NII, sequentially was down 11%. This provisioning does seem like a one-off but what does come our clearly is that there are some tough times ahead. The market has taken these numbers pretty badly as it looks upon SBI like a barometer for the entire banking sector and if these are the signs coming from SBI, the sector is surely looking at some major speed breakers ahead. The word on the Street is that smaller and private sector banks might not get impacted as much but banks dependent on corporate loans, like SBI, is sure to face some trouble. The only silver lining here is that thankfully, the numbers of SBI came in so late; if SBI had been the first to announce its numbers, markets would have written off the entire banking sector much earlier, turning a blind eye to all the good numbers too.

Courtesy: http://www.premiuminvestments.in/cover-feature-55016/106/Ongc-sbi-do-the-market-in-.html

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