SBI Q4 Results Review - Growth Outlook Remains Healthy: Dolat Capital

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Dolat Capital Report

State Bank of India reported largely in-line numbers with net interest income/pre-provision operating profit growth of 30% YoY/25%YoY, 10 basis points sequential expansion in net interest margin to 3.6%, benign credit costs and lower tax rates aiding return on assets of 1.2% for the quarter. Other income benefitted from strong recovery from written off accounts.

SBI's asset quality metrics were steady with continued improvement in gross non-performing asset ratios, low slippages at sub 0.5%, and decline in restructured book to 0.7%. Impact of Expected credit loss provisions should be absorbed without any meaningful impact on earnings as per management.

We build in overall provision costs of 0.6% over FY24/25E.

Loan growth was healthy at 4.6% QoQ and 17% YoY. Sequential growth was broad based, led by domestic corporate (6% QoQ), followed by retail and agri (5% QoQ each). We factor in loan growth of 12-13% over FY24/25E.

We factor in better net interest margin over FY24/25E, partly offset by higher opex assumptions.

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