SBI Q3 FY21 First Cut: 'Set to deliver positive surprise on asset quality' - YES Securities

- Earnings were slightly lower than estimates due to lower non-interest income

- Loan growth was ahead of estimates at 3% qoq and 7% yoy - driven by sustained strong traction in retail portfolio (up 15.5% yoy) - including investments in Corporate Bonds & CPs (credit substitutes), the loan growth stood is at 8% yoy

- Domestic NIM for the quarter at 3.34%, has remained stable sequentially.

- Reported Gross/Net NPLs at 4.8%/1.2% v/s proforma Gross/Net NPLs at 5.4%/1.8% - Rs53bn provision carried on proforma slippages including for unrealized interest - besides this and the provisions for restructured accounts, bank holds Rs63bn of Covid provisions (25-30 bps of Adv.)

- Proforma Slippages for 9M FY21 at Rs165bn and Restructuring requests received till Dec 31 at Rs181bn - combined at 1.5% of loan book

- SMA-2 as of Dec 31, adjusted for overlap with proforma slippages and restructuring, stood at just 30 bps of advances - this implies that impaired loan formation in FY21 could undershoot management's guidance (2.5% of advances) - Credit Cost in Q4 could be lower than Q3.

Results are positive for the stock and can drive further re-rating

Shares of STATE BANK OF INDIA was last trading in BSE at Rs.355.1 as compared to the previous close of Rs. 335.85. The total number of shares traded during the day was 6525979 in over 50154 trades.

The stock hit an intraday high of Rs. 358 and intraday low of 331.3. The net turnover during the day was Rs. 2230290537.

Source : Equity Bulls

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