SBI Q3 Results Review - Core Performance On Track; One-Offs Dent Earnings: Motilal Oswal

Motilal Oswal Report

State Bank of India’s Q3 FY24 profit after tax of Rs 91.64 billion came in 17% below our estimate of Rs 110 billion, affected by higher wage provisions and an exceptional item of Rs 71 billion. Adjusting for the exceptional item, net profit would have been Rs 144 billion.

Net interest income grew 4.6% YoY/0.8% QoQ (in line). Net interest margins declined 7 bp QoQ to 3.22% (domestic NIMs at 3.34%, down 9 bp QoQ).  Slippages increased marginally to Rs 50.5 billion, while healthy recoveries and write-offs led to a 13 bp decline in the gross non-performing asset ratio. RSA pool declined to Rs 189 billion or 0.6% of advances.

We raise our FY25 earnings per share estimates by 4.6% as the wage/pension provisioning gets completely done with in FY24 and expect the overall credit cost to remain under control.

We estimate FY25 return on asset/return on equity of 1.1%/19.6%. Reiterate our 'Buy' rating with an unchanged target price of Rs 800 (based on 1.2 times September-25E adjusted book value plus Rs 218 from subs).

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