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Dolat Capital Report
Stata Bank of India reported a strong quarter with net interest income growth 13% QoQ, 20 basis points sequential expansion in net interest margin to 3.24%, superior loan growth at 5% QoQ, and industry best credit costs of 40 bps aiding return on asset of 1% for the quarter.
Asset quality trends continued to impress with negative net slippages, rise in provision coverage ratio QoQ to 78%, and limited stress in the restructured book.
We factor in slightly higher NIM, impact of which is largely offset by lower other income. However, sharp decline in credit costs aid earnings upgrade of 14%/19% for FY23/24E.
We like SBI for its consistently superior asset quality metrics. Scope of subsidiary value unlocking also aids positive outlook.
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