State Bank of India's June-quarter earnings reinforced brokerages' positive view on the lender, with JPMorgan and Citi raising their target prices after a broad-based beat across net interest margin, fee income, loan growth and operating efficiency. Bernstein retained its 'Market Perform' rating but said sequential NIM improvement and robust loan growth supported the quarter.
Brokerages highlighted the rebound in domestic NIM, acceleration in advances and lower credit costs as key positives. SBI also raised its FY27 credit growth guidance to 14%-15% from 12%-14%, while management retained its 3% domestic NIM target for the year. Asset quality remained stable despite a sequential increase in fresh slippages.
The bank reported double-digit growth in net interest income and profit, while operating profit increased and return on assets improved.
SBI Q1 Highlights (Standalone, YoY)
- Interest income rose 8.5% to Rs. 1,27,896 crore from Rs. 1,17,830 crore.
- Net interest income increased 14.9% to Rs. 46,992 crore from Rs. 40,907 crore.
- Net profit rose 10.2% to Rs. 21,121 crore from Rs. 19,160 crore.
- Operating profit increased 9.8% to Rs. 33,529 crore from Rs. 30,544 crore.
- Domestic NIM improved to 3% from 2.93% sequentially.
- Global NIM increased to 2.86% from 2.81% sequentially.
- GNPA improved to 1.47% from 1.49% sequentially.
- NNPA improved to 0.38% from 0.39%.
Fresh slippages increased 27.6% sequentially to Rs. 7,046 crore from Rs. 5,521 crore, while total provisions rose 75.7% to Rs. 5,047 crore. However, credit cost declined to 0.27% from 0.47% a year earlier and 0.37% in the previous quarter.
Fee income increased 20.8% year on year to Rs. 9,476 crore, while cost of deposits declined to 4.85% from 5.04% sequentially. Return on assets improved to 1.14% from 1.11% a year earlier.
Management said credit growth accelerated across retail, agriculture, MSME and corporate segments, while deposits increased 10% year on year. SBI has mobilised nearly $6 billion through FCNR(B) deposits and aims to raise around $10 billion under the scheme.
For FY27, management expects credit growth of 14%-15%, deposit growth of 10%-11% and continues to target a domestic NIM of 3%.
Here's what brokerages are saying after SBI announced Q1 results:
JPMorgan
- Maintained 'Overweight'; Target Price Raised To Rs. 1,280 From Rs. 1,240
- Called the June quarter strong, with a broad-based beat.
- Highlighted sequential NIM expansion as a key positive.
- Raised FY27 credit growth guidance to 14%-15% from 12%-14%.
- Lower credit costs and benign asset quality support the positive outlook.
Citi
- Maintained 'Buy'; Target Price Raised To Rs. 1,300 From Rs. 1,230
- Called the quarter a strong beat, driven by NIM, fee income, cost efficiency and loan growth.
- Domestic NIM rebounded 7 basis points sequentially to 3%, supporting management's FY27 target.
- Advances accelerated 19% year on year, led by retail, SME and agriculture.
- Operating expenses remained tightly controlled.
- Management reiterated its 3% domestic NIM and 14%-15% credit growth guidance for FY27.
- Sees limited NIM impact from FCNR(B) deposit mobilisation.
Bernstein
- Maintained 'Market Perform'; Target Price At Rs. 1,300
- Said the quarter was broadly steady.
- Strong loan growth and sequential NIM improvement supported net interest income.
- Loan growth remained robust at 19% year on year, with broad-based traction across agriculture, SME, corporate and retail.
- Asset quality remained stable despite a seasonal increase in slippages.
- Strong fee income growth and controlled operating expenses supported improvement in return on assets.
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