SBI Q3 Results Review - Loan Growth Momentum Intact, Pension Blip Impacts Net Profit: Axis Securities

Axis Securities Report

With growth prospects remaining intact and State Bank of India confident to grow assets under management at 14-15% and deposits at 12-13%, we model in advances growth of 13.5%+ over FY24-26E.

Further, the management is confident of maintaining domestic margins at current levels going forward. However, margins may be impacted by 2-3 basis points due to an increase in cost of funds.

Opex is expected to remain elevated due to provision for wage revision. Another provision of Rs 5,408 crore will be recored in Q4 FY24 for increase in wage provision from earlier 14% to 17%.

However, incremental productivity through digital is expected to aid pre-provision operating profit.

Further, consistent improvement in asset quality, we believe, would keep credit costs under control. Among PSU banks, SBI with a healthy provisio coverage ratio, adequate capitalisation, a strong liability franchise, and an improved asset quality outlook remains the best play of the resilient Indian economy.

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