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Motilal Oswal Report
State Bank of India's Q4 FY24 profit after tax grew 24% YoY to Rs 207 billion (28% beat), driven by higher other income, lower opex and lower-than-expected provisions.
Net interest income grew 3.1% YoY/4.6% QoQ (in line). Net interest margins expanded 8 bp QoQ to 3.3% (domestic NIMs at 3.47%, up 13 bp QoQ). Opex grew 1.8% YoY to Rs 302.8 billion (9% lower than our estimate) due to a lower-than-expected impact of the 12th bipartite wage settlement. Pre provision operating profit thus grew 17% YoY to Rs 287.5 billion (25% beat).
Slippages declined to Rs 39.8 billion, which, along with healthy recoveries and write-offs, led to a 18 bp/7 bp decline in the gross non-performing asset/net non-performing asset ratios. RSA pool declined to Rs 173 billion or 0.5% of advances.
SBI has made a swift recovery in earnings, from a loss of ~Rs 65 billion in FY18 to profits of Rs 611 billion in FY24. We also note that the cumulative profit of the bank over the past three years (FY22-24) is equivalent to what the bank earned in the prior 20 years combined.
We believe that SBI is well positioned to deliver steady earnings, with FY26E RoA/RoE of 1.1%/18.5%. Reiterate Buy with a target price of Rs 925 (1.4 times FY26E ABV + Rs 240 from subs).
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