State Bank of India - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 205; MCap- Rs. 183266 crore)

SBI reported a strong operational performance with NII surging 15% YoY and asset quality guidance looks reasonable.

Q2FY21 Earnings Summary

- SBI reported Rs. 60000 crore i.e. 2.5% of loans as expected total stress including fresh slippages (Q2 - Rs. 14388 crore & H2 - Rs. 20000 crore) and restructuring (Rs. 19500 crore). Total provisioning for the quarter stood at Rs. 10118 crore, which includes Covid-19 provisioning of Rs. 239 crore only. Overall Covid provision stands at Rs. 3247 crore which is lower than other large banks

- Asset quality was positive as slippages continued lower at Rs. 2756 crore vs Rs. 3637 crore QoQ led by standstill on moratorium. GNPA saw a decline from Rs. 129661 crore in Q1FY21 to Rs. 125863 crore. Consequently, GNPA ratio declined 16 bps QoQ to 5.28 % from 5.44%, while NNPA ratio declined 27 bps QoQ to 1.59%. If supreme court standstill was not available, GNPA ratio would have been 5.88% and NNPA ratio would be 2.08%. Overall PCR ratio increased QoQ to 88.19% from 86.32%. PCR (excl woff) stood at 71.04% from 67.07% QoQ

- Net interest income grew by 15% YoY and 6% QoQ to Rs. 28181crore. Domestic NIM rose to 3.34% from 3.24% QoQ. Strong performance looks a combination of lower interest reversal arising from lower slippages and growth in corporate bonds. These are likely to be moderated as slippages surge post SC standstill dispensation ends

- Loan growth was in-line at 6% YoY to Rs. 23.83 lakh crore. However including CP, corporate bonds etc credit growth was 8% YoY which boosted NII. Retail (Personal) advances grew 14.55% YoY, Agri advances increased by 4.19% YoY and corporate book grew 2.8%. In retail, home loan, which constitutes 23% of bank's domestic advances, has grown by 10.34%

- Deposits grew 14.4% YoY to Rs. 34.7 lakh crore; boosted by savings deposit. Saving deposits grew by 17% YoY. CASA ratio improved 5 bps QoQ to 45.39%

- Non interest income (excluding one off) remained stable YoY at Rs. 8528 crore. Fee income improved QoQ to Rs. 5243 crore from Rs. 4470 crore. Overall PPP (excl one offs) grew 12% YoY and flat QoQ to Rs. 16460 crore and PAT came at Rs. 4574 crore, up 52% YoY and 9.5% QoQ

We will be coming out with a detailed report soon.

Shares of STATE BANK OF INDIA was last trading in BSE at Rs.207.05 as compared to the previous close of Rs. 204.75. The total number of shares traded during the day was 5225212 in over 32956 trades.

The stock hit an intraday high of Rs. 209 and intraday low of 198.1. The net turnover during the day was Rs. 1067599464.

Source : Equity Bulls

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