SBI's m-cap fell the most in Asia-Pacific in Q1 2023
What's the story
For the State Bank of India (SBI), the first three months of 2023 were tumultuous at best. According to data compiled by S&P Global Market Intelligence, India's largest lender by assets saw a steep fall in market capitalization.
Among the top 20 banks in the Asia-Pacific, SBI had the worst quarter. Let's take a look at what led to this.
Context
Why does this story matter?
The global banking sector has been under a lot of pressure in the last few months due to the collapse of two American banks and the crisis at Credit Suisse.
India's banking sector wasn't affected much by the global crisis, mainly due to the limited presence of foreign banks in the country.
However, the fall in SBI's market cap is concerning.
Market cap
SBI's market cap fell by about 15%
Between January and March this year, SBI's market cap fell around 14.7% to $56.92 billion. The bank is currently placed 14th in the list of Asia-Pacific's top 20 banks.
In the previous quarter, it was placed 11th. The lender's shares fell 14% year-over-year.
Apart from SBI, only Japan's Mitsubishi UFJ Financial Group registered a double-digit decline in market cap in the quarter.
Reason
SBI's bullish run came to a halt after Hindenburg report
In September last year, SBI's market cap crossed Rs. 5 trillion. It became the third Indian bank to do so.
It also became the first bank to achieve Rs. 6 trillion AUM (assets under management) in the home loan segment.
The lender's bullish run came to a halt this year after a Hindenburg Research report accused Adani Group of accounting fraud and stock manipulation.
Report
Investors were wary of SBI's exposure to Adani Group
Shares of SBI have been under pressure ever since Adani Group's rout started in January after the report. The market and investors were wary of the bank's exposure to the embattled conglomerate.
Many feared that Adani Group would default on its loans from the bank. SBI later clarified that its exposure to Adani is only 0.8-0.9% of its loan book.
Asia
Two-thirds of top banks in Asia-Pacific registered a decline
SBI's clarification did not help much with its performance in the market. However, things are not that different for other top banks in Asia-Pacific.
Over two-thirds of the top banks in the region saw a decline in market cap between January and March.
Some of the top Chinese banks are among those that registered a fall in market cap.