SBI Share: Fundamental Analysis

State Bank of India (SBI) is a Fortune 500 company and the largest and oldest bank in India, with over 200 years of history. Headquartered in Mumbai, it is a public sector bank that provides banking and financial services. SBI has a vast network, with around 22,219 branches and about 62,617 ATMs throughout India. It also has around 71,968 business correspondent outlets. The bank holds a 22.84% market share in deposits and a 19.69% share in loans in India, serving approximately 450 million customers.

Key Financials Metrics

Pros

The company has shown impressive profit growth, achieving a compound annual growth rate (CAGR) of 98.7% over the last 5 years. Additionally, it has maintained a steady dividend payout, distributing 18.1% of its earnings to shareholders, highlighting its commitment to returning value.

Cons

However, there are a few concerns. The company’s low-interest coverage ratio indicates potential challenges in covering its interest obligations. It also has significant contingent liabilities, amounting to ₹24,65,418 crore, which could pose financial risks. Furthermore, the earnings include a substantial portion of other income, totalling ₹1,51,296 crore, which may affect the overall quality of earnings.

State Bank of India Share Price Growth

The  State Bank of India’s share price has experienced a remarkable surge over the past year, climbing approximately 45.52% in the last 1 year, with a year-to-date increase of 28.25%. On October 30, 2024, the State Bank of India’s share price opened at ₹828.00 and touched the day low of ₹823.60 at 01:55 PM on the NSE. As of October 30, 2024, State Bank of India (SBI) shares have seen a 52-week high of ₹912.10, recorded on June 3, 2024, and a 52-week low of ₹555.25, reached on November 22, 2023.

SBI Q1 Financial Results Overview

State Bank of India (SBI) posted a slight increase of 0.89% in net profit, reaching ₹17,035.16 crore for the April to June quarter of the 2024-25 financial year, compared to ₹16,884.29 crore in the same period last year, according to its filing with the Bombay Stock Exchange (BSE) on August 3.

SBI’s net interest income (NII) grew 5.7% year-on-year to ₹41,125 crore but saw a slight decline of 1.3% from the previous quarter. The bank’s net interest margin (NIM) for Q1 dropped by 12 basis points to 3.35%, down from 3.47% in the June quarter of FY2024.

SBI’s gross non-performing assets (NPAs) fell by 55 basis points to 2.21%, from 2.76% in the same period last year, bringing total NPAs to ₹84,226.04 crore compared to ₹91,327.84 crore last year. Net NPAs also decreased to 0.57% from 0.71% year-on-year. The bank’s capital adequacy ratio (CAR) stands at 13.86% for Q1 FY2025, reflecting stable capital health.

Recent Developments

The State Bank of India (SBI) was named the Best Bank in India for 2024 by Global Finance Magazine at its 31st Annual Best Bank Awards event, which took place alongside the Annual Meetings of the IMF and the World Bank in Washington. SBI Chairman CS Setty accepted the award, recognising the bank’s dedication to providing excellent services and promoting financial inclusion across the country by earning customer trust, as stated by the bank.

State Bank of India (SBI) raised ₹5,000 crore through its first Basel III compliant Additional Tier 1 bonds for this financial year at a 7.98% interest rate. 

Indian Banking Sector Overview

The Indian banking system comprises 13 public sector banks, 21 private sector banks, 44 foreign banks, and 12 small finance banks. As of June 2024, India had a total of 15,17,580 micro-ATMs, along with 1,26,772 on-site ATMs and Cash Recycling Machines (CRMs). In the first 4 months of FY23, banks added 2,796 new ATMs, a notable increase from 1,486 in FY22 and 2,815 in FY21. Additionally, all new bank accounts in rural areas are now opened digitally, and the Boston Consulting Group (BCG) estimates that digital payments will account for 65% of all transactions by 2026.

In 2024, public and private banks’ total assets reached US$1,861.72 billion and US$1,264.28 billion, respectively, with public sector banks representing 59.53% of total banking assets. Public banks generated interest income of US$128.1 billion, while private banks earned US$95.7 billion in 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.