SBI Q2 Results Review - Loan Growth Momentum Continues; Deposits Pick Up Sequentially: Nirmal Bang

Nirmal Bang Report

State Bank of India’s Q2 FY25 results were a beat to our estimates across pre-provision operating profit (variation +11.6%) and profit after tax level (variation +6.3%); supported by-

1. higher other income (variation +21.1%) and,

2. lower opex (variation -5.1%).

Net interest income was marginally below our estimates (variation -2.6%); majorly on account of moderation in net interest margins (at 3.14% for Q2 FY25 versus 3.22% for Q1 FY25). Loan and deposit growth stood at 15.3% YoY / 2.9% QoQ and 9.1% YoY / 4.4% QoQ respectively.

Asset quality stood pristine with gross non-performing asset and net non performing asset at 2.13%/0.53% respectively. The bank, for first time, crossed provision coverage ratio of 75%, with the same standing at 75.66%.

We expect SBI’s PAT to clock a CAGR of 15.3% over FY24-FY27E, which will be supported by 14.4% CAGR in loan growth, stable margins, improved cost ratios and credit cost of 52bps. This will lead to RoA/RoE of 1.1%/17.1% in FY27E.

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