SBI share gains 3% as lender to raise Rs 10,000 crore via bond sale

a State Bank of India (SBI) share price rose almost 3% on Tuesday amid a report that the lender would raise Rs 10,000 crore through sale of bonds. State Bank of India share gained 2.61% to the intraday high of Rs 200.2 on BSE against the earlier close of Rs 195.10.

The large cap stock stands higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages.

The share has lost 30.64% in one year and fallen 40% since the beginning of this year.

Market capitalisation of the bank stood at Rs 1.77 lakh crore as of today's session. In a month, the share has gained 5.6%.

Total 13.76 lakh shares changed hands amounting to turnover of Rs 27.38 crore.

This is first bond sale by the SBI in 2020 and large domestic institutional investors, such as Life Insurance Corporation of India and the Employees' Provident Fund Organisation (EPFO) are likely to infuse funds in the lender.

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The tier-II bonds are likely to offer 6.65-6.75 per cent, with a 15-year maturity, reported The Economic Times. The bonds will likely come up for bidding on the electronic platform of bourses on Wednesday. SBI plans to raise Rs 25,000 crore capital through additional tier-1 (AT1) and tier-II bonds from the market in FY21.

This capital is expected to strengthen capacity to grow business and create buffers to withstand shocks. In Q1 of current fiscal, the lender reported a 81.2% growth in its standalone profit at Rs 4,189.34 crore in Q1FY21 against Rs 2,312.2 crore profit in the previous quarter an year ago.

Company's Net interest income, the difference between interest earned and interest expended, came 16.1% higher YoY at Rs 26,641.56 crore, compared to Rs 22,938.8 crore in the year-ago period.

SBI also reported a one-time gain of Rs 1,539.7 crore this quarter. Lender registered a sharp decline in fresh slippages at Rs 3,637 crore in Q1FY21, compared to Rs 8,101 crore in Q4FY20.

SBI's provisions and contingencies stood at Rs 12,501.3 crore, rising 36.1% YoY, including an additional provision of Rs 1,836 crore on account of COVID-19 related accounts. Provisions were down 7.4% QoQ.