SBI Q1 Results Review - Earnings Inline; Growth Outlook Remains Healthy: Motilal Oswal

Motilal Oswal Report

State Bank of India reported Q1 FY25 PAT of Rs 170.4 billion (up 1% YoY, in line), driven by controlled opex. Net interest income grew 5.7% YoY to Rs 411.3 billion (4% miss). Net interest margins moderated 8 bp QoQ to 3.22%.

Opex growth was under control at 1% YoY to Rs 258.4 billion (9% lower than our estimate), resulting in 5% YoY growth in pre-provision operating profit to Ra 264.5 billion (in line).

Loan book grew 16% YoY/1% QoQ, while deposits grew 8% YoY (flat QoQ). Current account and savings account ratio moderated 41 bp QoQ to 40.7%.

SBI's fresh slippages stood at Rs 79.03 billion in a seasonally weak quarter (annualized slippage rate of 0.84%). Credit cost stood at 0.48% versus 0.32% in Q1 FY24. Gross non-performing asset ratio improved by 3 bp QoQ to 2.2%, while net non-performing asset ratio was flat at 0.6%. Provision coverage ratio ratio declined 61 bp QoQ to 74.4%.

We broadly maintain our earnings estimates and expect FY26 return on asset/return on equity of 1.1%/18.2%. Reiterate Buy with a target price of Rs 1,015 (1.5 times FY26E adjusted book value).

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