SBI Share price today: Choice Broking maintains Buy rating with target price of Rs 470

SBI Share price today: Choice Broking says State Bank of India (SBI) reported a strong set of numbers for Q3FY21, above market estimates, with net profit at Rs 51.9 bn (13.6% QoQ) on the back of lower provisioning and strong operating performance. Along with strong business growth (credit at 7.6% YoY) and profitability, improvement in assets quality was significant.

SBI Share price today: Choice Broking says State Bank of India (SBI) reported a strong set of numbers for Q3FY21, above market estimates, with net profit at Rs 51.9 bn (13.6% QoQ) on the back of lower provisioning and strong operating performance. Along with strong business growth (credit at 7.6% YoY) and profitability, improvement in assets quality was significant. SBI reported proforma GNPA at 5.44% (down 44 bps QoQ) and NNPA at 1.81% (27 bps QoQ decline) which looks comforting considering the pandemic led turbulence to economy impacting industry performance. SBI received restructuring applications worth of Rs 181.3 bn out of which 65% are from corporate segment and 21% from the retail segment. SBI share price is trading flat todat at Rs 391.

SBI Profitability remains strong, domestic NIM expands:

SBI NII grew at 3.7% YoY and 2.3% QoQ. Low NII growth was due to a strong base as one steel a/c revived during the year ago quarter. Adjusting with this one-off interest income, NII grew by a healthy 21.4% YoY. Interest cost was declined by -5% YoY in line with the industry trend, thus supporting domestic NIM to 3.34% if adjusting with this one-offs . Other income grew by 1.5% YoY due to lower treasury income, albeit grew strongly on sequential basis. OPEX rose by 11.1% YoY due to wage provisions which has now been addressed entirely.

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SBI Business growth remains robust:

Advances grew by 7.6% YoY higher than market estimates due to strong growth in retail credit. During Q3 FY21, retail advances grew by 15.5% YoY, corporate credit at 2.2% YoY, SME at 5.6% and agri advances at 1.8%. With the retail segment, home loans grew by 10% YoY, auto at 3.3% YoY while other retail credit includes personal loans growing at 31.5% YoY. Share of retail segment to domestic advances stood at 39.1% in Q3FY21, up from 36.4% in the year ago quarter. Corporate segment share has shrunk from 39% in Q3 FY20 to 37% in quarter under review due to slower growth in the corporate segment. Deposits grew by 13.6% YoY of which CASA at 14.9% YoY outpacing the term deposits growth. CASA shares stood at 45.2% v/s 44.7% in the year ago quarter. CAR stood at 14.5% with Tier I at 11.7%.

SBI Assets quality improves significantly:

SBI reported net proforma slippages of Rs 20.7 bn in Q3 FY21. Gross slippages were however Rs 80 bn which also improved significantly compared to proforma slippages of Rs 143 bn in Q2 FY21. Reported restructuring assets at 0.7% of loans remained low and within the guidance (<1%). 9M FY21 proforma slippages and restructuring collectively aggregated to Rs 412.2 bn which is within the mgmt guidance of Rs 600 bn given in Q2 FY21. Assets quality is likely to remain at a comfortable position with highly likelihood of no negative surprises in the near-to-medium term.

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