SBI Q3 Results Review - Steady Asset Quality Metrics; Growth Outlook Remains Upbeat: Dolat Capital

Dolat Capital Report

State Bank of India reported a healthy quarter with net interest income growth 24% YoY/8% QoQ, 20 basis points sequential expansion in net interest margin to 3.5%, and low non performing asset provisions aiding return on assets of 1.1% for the quarter.

While fee growth was muted, pre-provision operating profit (up 36% YoY) benefitted from reversal of mark-to-market losses. With 75% of loans floating rate (45% linked to Marginal Cost of Funds Based Landing Rate), near term NIM outlook remains upbeat.

Asset quality metrics were steady with continued improvement in gross non-performing asset ratios, low slippages at sub 0.5%, and stable restructured book at 0.9%.

Outstanding exposure to Adani group stood at 0.9% of advances, mainly towards operational assets.

Loan growth was healthy at 4% QoQ and 19% YoY. Sequential loan growth was driven by micro, small and medium enterprise (up 11%), followed by retail and agri (up 4-5% QoQ each).

Domestic and overseas corporate book was flattish. We factor in loan growth of 16% for FY23E.

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