Shares of State Bank of India on Wednesday plummeted by over 7 per cent on the bourses, amid concerns over a rise in the lender’s non-performing assets and a rating downgrade of the entire Indian banking sector by Moody’s.
The bank, the largest in the country and a state-run behemoth, reported its second-quarter results, wherein it disclosed a rise in NPAs and also fell short of the market expectations for its overall financial performance.
Besides, global rating agency Moody’s downgraded its outlook on the Indian bankig system to “negative”, from “stable” earlier.
Selling pressure was significant in the stocks of other financial sector companies as well.
ICICI Bank settled with a loss of 2.16 per cent, HDFC Bank lost 1.50 per cent, IDBI Bank fell by 3.19 per cent and Union Bank ended 2.10 per cent lower.
The BSE banking index also dropped by 2.62 per cent.
The shares of SBI (State Bank of India) opened on a positive note this morning, but slipped into the red after the announcement of its quarterly results and the news of the Moody’s rating action.
The stock settled 7.2 per cent down at Rs 1,853.40 at the NSE, while it closed 6.76 per cent lower at Rs 1,862.50 at the BSE.
In the process, the company’s market value dipped by over Rs 8,500 crore to Rs 1,18,268 crore.
Decline in the SBI stock was a major contributor in today’s fall of 207.43 points in the market benchmark Sensex.
Analysts said that the shares of SBI fell mainly on concerns of rise in NPAs, as its bad loans have risen considerably in export-oriented units and metal industry.
“SBI reporting higher than expected NPA and Moody’s downgrade of Indian banking system to negative were enough to create capitulation in the shares for the day,” Inventure Growth and Securities Head Research Milan Bavishi said.
On a consolidated basis, SBI reported a 48.60 per cent jump in net profit to Rs 3,470.43 crore for the July- September quarter.
However, its gross non-performing assets (NPA) increased to 4.19 per cent of total assets at the end of September, from 3.38 per cent a year ago.
Besides, SBI’s provisioning of bad loans rose by 21 per cent to Rs 4,664 crore.
