SBI shares fall as Q3 earnings miss estimates

Shares of State Bank of India (SBI) traded lower on February 5 after the public sector bank’s third-quarter earnings fell short of Street estimates, dragged by a high wage and pension bill.

The country’s largest lender’s net profit fell 35 percent on-year to Rs 9,163 crore, hit by Rs 7,100 crore pension liabilities.

Adjusted for this one-time impact, the overall earnings remained healthy, driven by lower credit cost despite weak core operating performance, analysts.

The net interest income (NII), the difference between interest earned and paid, came in at Rs 39,815 crore, missing estimates of Rs 40,304 crore. Its interest margin (NIM) stood at 3.22 percent, the bank told exchanges February 2.

At 9:20 am, SBI shares were trading 1 percent lower at Rs 642.75 on the National Stock Exchange (NSE).

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SBI‘s gross non-performing asset (NPA) fell 3.14 percent on-year to 2.42 percent. Net NPA for the quarter remained flat at 0.64 percent.

According to analysts at Motilal Oswal, SBI’s operating expenses remained high, thereby affecting Pre-Provision Operating Profit (PPoP) growth.

PPoP is the amount of income a bank earns in a period before taking into account funds set aside to provide for future bad debts.

The bank’s business growth remains robust, with signs of a recovery in the corporate segment, the brokerage said, adding that asset quality remains healthy as the GNPA ratio improved further and the restructured book is well-managed.

Analysts at Motilal Oswal estimate SBI to deliver a Return on Assets (RoA) of 1.1 percent and Return on Equity (RoE) of 19.6 percent in FY25.

Also Read | SBI Q3 results: Net profit plummets 35% to Rs 9,163 crore, asset quality healthy

On February 2, the SBI stock closed marginally higher at Rs 648 a piece on the National Stock Exchange. The stock has gained around 18 percent in the past year, underperforming the benchmark Nifty, which has risen 23 percent during the period.

Several brokerages, including Motilal Oswal, Jefferies and Nomura, have a “buy” call on the stock. JP Morgan and Bernstein have an “overweight” call on SBI.

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