Results Corner: Angel Broking reviews SBI post Q3 numbers

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Results Corner: Angel Broking reviews SBI post Q3 numbers

After a weak set of numbers from India’s largest public sector lender, Vaibhav Agrawal, banking analyst at Angel Broking, tells CNBC-TV18 that upsides are limited for SBI.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ News and Notices about SBI See interviews with SBI Management See what other Experts & Brokerages are saying about SBI See previous Results of SBI SBI BSE | NSE 31/05/12 Are Mutual Funds betting on SBI?

After a weak set of numbers from India's largest public sector lender, Vaibhav Agrawal, banking analyst at Angel Broking tells CNBC-TV18 that upsides are limited for SBI . "It is an average performer because of which not seeing too much of upside from these levels," he explained.

Agarwal says that increase in net non-performing assets has been one of the sharpest in the industry, but it was expected due to the pressure seen on other banks. "The positive is clearly on the operating performance where the net interest income and other income level beats all the other PSU banks," he added.

Going forward, he sees the possibility of capital infusion in the current quarter to act as a positive for the stock.

Below is an edited transcript of his interview. Also watch the accompanying video.

Q: Your first thoughts on SBI numbers?

A: The asset quality performance has been below average; in fact it is one of the highest increases in the sector. Even on the net NPA it is well above average, so the quality of earnings does look a little weak on the asset quality side.

There has been some other PSU banks as well which has seen a sharp deterioration in net NPAs, but for a bank of SBI size, even a 20% increase in net NPAs would go down as a weak set of numbers on asset quality.

Q: Do you think this was largely discounted by the market and we are not going to see much of reaction going forward from here?

A: Mostly all the PSU results are out and it was quite clear that on the asset quality front there are pressures and to an extent there was a chance that SBI too could disappoint. The positive is clearly on the operating performance which is the NII and other income level where SBI beats all the other PSU banks. The other thing is the capital infusion which comes in the fourth quarter which would also add to the stock.

Overall, our final analysis is that we would expect the stock to be more of a market performer, an average performer because of which not seeing too much of upside from these levels.