SBI Q4 Results Review - Surging Quarterly Profits, Bar Set For Higher Return Ratios: ICICI Direct

ICICI Direct Report

State Bank of India reported a stellar performance in spite of higher expenses. Gross non-performing asset, net non-performing asset improved 36 basis points, 10 bps QoQ respectively; slippage ratio at 0.41%.

Though net interest income was up 29% YoY, other income grew 17% YoY, higher opex on employee provisions dented operating profit growth. Net interest margins improved QoQ by 10 bps.

SBI's lower provisions and healthy topline resulted in profit after tax growth of 83% YoY at Rs 16695 crore.

Gross advances up 16% YoY, deposits up 9.2% YoY; current account and savings account dipped to 43.8% versus 44.5%.

Key triggers for future price performance:

• SBI provided credit growth guidance of ~12-16%, with NIMs to be maintained.

• Healthy recoveries trend to continue in the coming quarter (to the tune of Rs 3000-3500 crore).

• Management is comfortable on expected credit loss provisions and adequate buffer to aid healthy earnings and, thus, return on asset trajectory of more than 1% to continue.

• Continued traction in customer and business accretion via “Yono”. Unlocking of subsidiaries value to act as positive surprise.

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