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Motilal Oswal Report
State Bank of India reported a steady quarter as net profit at Rs 143.3 billion beat our estimate, aided by lower provisions even as bank made higher provisioning towards wage revisions.
Net interest income grew 12.3% YoY/1.5% QoQ (3% beat), while domestic net interest margins declined 4 bp QoQ to 3.43%. Total revenues grew 14% YoY.
SBI's slippages declined to Rs 41 billion after a seasonal bump in Q1, along with healthy recoveries/write-offs. As a result, gross/net non-performing asset ratios declined to 2.55%/0.64%. Rate sensitive assets pool declined to Rs 209 billion (60 bp of advances).
We broadly maintain our estimates as higher wage provisioning gets offset by controlled credit costs. We estimate FY25E return on asset/return on equity of 1.1%/18.3%.
Reiterate 'Buy' rating with an unchanged target price of Rs 700 (based on 1.1 time FY25E adjusted book value plus Rs 202 from subs).
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