Shares of State Bank of India (SBI), the biggest lender by assets, declined over 5 per cent on Tuesday after the company reported 5.97 per cent jump in consolidated net profit figures for the quarter ended June 2015. The bank earned Rs 4,713.57 crore during April-June 2015 against Rs 4448.15 crore in the same quarter last year.
The share price of SBI close 5.25 per cent lower at Rs 267.90 on the National Stock Exchange.
Return on Equity of SBI Group declined by 23 basis points from 12.74 per cent in Jun 14 to 12.51 per cent in Jun 15.
Standalone net profit of SBI rose 10.2 per cent to Rs 3692.43 crore in the first quarter of the ongoing financial year against Rs 3349.08 crore in the corresponding quarter last year.
Gross bad loans as a percentage of total loans marginally rose to 4.29 per cent from 4.25 per cent in the previous quarter but was lower than 4.9 per cent reported a year earlier. The BSE Sensex was trading 185 points down at 27,917.
Vaibhav Agrawal, VP Research, banking, Angel Broking, said, “With expectation of improvement in economic growth in the medium term, asset quality woes would reduce, which is expected to improve return ratios. The bank’s core strength has been its high CASA and fee income, which has supported its core profitability in challenging times. Its strong capital adequacy also provides comfort. The bank’s current valuations of 1.1x FY2017E adjusted book value, after adjusting for subsidiaries, factors in the positives for the bank. We recommend an accumulate rating on the stock.”