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Systematix Research Report
State Bank of India's net interest income and core fee income were marginally below our estimates. Lower recoveries on written-off pools further dragged non-interest income.
After utilising Rs 62 billion of contingent provision towards restructured loan book (of Rs 370 billion), the bank now holds provision cover of ~21%, with excess provision of ~Rs 25 billion.
SBI holds 100% provision cover on security receipts and 75% provision coverage ratio on gross non-performing assets.
The bank's balance sheet is healthy with adequate provision cover and much lower net delinquency rate at ~22 bps in FY22 (versus 51 bps in FY21).
Credit cost run-rate also fell to ~54 bps in FY22 and to 51 bps in Q4 FY22.
Few areas that SBI needs to work on are-
strengthen current account and savings account deposit franchise and gain incremental market shares,
reduce overdependence on Xpress retail credit and
expand loan-to-deposit ratio to improve margin.
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