Shares of the country's largest lender State Bank of India (SBI) rose nearly 5 per cent to hit record high of Rs 622.90 on the BSE after it reported highest-ever quarterly profit in July-September period and its asset quality also saw an improvement.
SBI's net profit in second quarter of the current financial year rose 74 per cent to Rs 13,265 crore from Rs 7,626.57 crore during the same period last year. On a sequential basis its profit more than doubled from Rs 6,068 crore in the previous quarter.
Sharp jump in profit came on the back of lower provisioning for bad loans as its asset quality saw an improvement during the quarter.
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SBI's gross non-performing assets (NPA), as a percentage of total advances, came down to 3.52 per cent from 4.9 per cent in the year ago period and 3.91 per cent in the previous quarter. Its provisions for bad loans came down to 2,010.87 crore from Rs 4,268 crore in the previous quarter.
Its net interest income or the difference between interest earned from loans and interest expended on deposits advanced 13 per cent annually to Rs 35,184 crore.
"Loan growth was strong and the bank expects the momentum to continue. High mix of floating loans, which will benefit from loan re-pricing, will continue to support the NII and overall earnings even as deposit cost could see some increase. We estimate earnings to post 32 per cent CAGR over FY22-24 and project SBIN to deliver an FY24 RoA/RoE of 1.0%/ 17.3%, respectively. Maintain buy with target price to Rs 700 (based on 1.4x FY24E ABV + INR192 from subsidiaries). SBIN remains one of our preferred picks in the sector," brokergae firm Motilal Oswal said in a report.
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As of 12:24 pm, SBI stock was trading 3.5 per cent higher at Rs 614 outperforming the Sensex which was down 0.11 per cent.
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