Friday, January 2, 2009

Stock Idea; State Bank of India

The only Indian Bank to find place in the Fortune Global 500 List (2008), going up from the 495th spot last year to 380th place, SBI is a banking stock, enjoying immense fancy amongst the investors. The sheer size and reach of the bank is so large that for any new generation bank, to even think of making it to half a mark as SBI would be an achievement in itself.
SBI, as a stock has been seeing some volatile movements over the past few days. When the financial crisis broke out in USA, like all banking stocks, SBI too lost a lot of ground. But once the Finance Minister categorically stated that public sector banks have no or minimal exposure to this crisis, SBI, from the biggest loser became the biggest gainer. And 2008 has seen investor’s faith getting restored in public sector banks, especially SBI.
Financially, it has been doing well. The Bank has shown a business growth of 106% on YoY at Rs.10,8881 crore, helped by higher fee and interest income. Operating profit grew by 54.52% to Rs.4193.20 crore. Increased interest and other income helped improve the operating profit. Net profit was at Rs.2378 crore for Q2FY09 as against Rs.2151 crore in Q2FY08.
Deposits grew to Rs.57861 crores, up 68% and advances grew to Rs.51020 crore, up 162%. Large corporate advances has grown by 48.46%. Home loans grew by 23.47%, auto loans by 30.48% and education loans by 43.81%.
Gross NPA ratio improved to 2.51% and net NPA to 1.34%. CAR of the Bank as on 30.09.2008 is 12.14 % and Tier I CAR is 8.67 % as per Basel I.
SBI is the largest bank, it has currently got a network of 11,111 branches. In terms of sheer reach, it is way ahead of others, giving it the edge over all others. It continues to remain the trusted bank in rural India. Undoubtedly, the most bankable stock in these uncertain times.


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