SBI Q4 Results Review - Earnings Surpass The Rs 500 Billion Milestone; Outlook Positive: Motilal Oswal

Motilal Oswal Report

State Bank of India delivered a mixed quarter as profit after tax rose 83% YoY to Rs 166.9 billion (10% beat), aided by lower provisions in Q4 FY23. Pre-provision operating profit, albeit, reported a miss of 9% hit by higher opex.

Net interest income growth was healthy as margin expanded ~10 basis point QoQ during the quarter.

Slippages remained under control at Rs 35 billion, while recoveries and upgrades stood higher than slippages. As a result, the gross/net-non-performing asset ratios improved 36 bp/10 bp QoQ to 2.8%/0.7%. The restructured book too declined to 0.8% in Q4 FY23.

We maintain our estimates. We further estimate return on asset/return on equity of 1.0%/17.1% in FY25.

Highlights from the management commentary

• Credit growth is expected to be ~12%-14% in FY24.

• RoA for FY24 is likely to be around the FY23 levels (0.96% in FY23).

• Credit cost came in at ~32 bp for FY23 and is likely to remain similar for FY24.

• SBI believes that it has some further cushion in terms of Marginal Cost of Funds based Lending Rate re-pricing that is likely to support margins.

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