Operational performance was above estimates with NII growth at 12.8 % both YoY and QoQ to Rs 35183 crore, due to improvement in NIMs (up 30 bps QoQ) to 3.55%(domestic) and high loan growth. Other income was up 8.1% YoY and witnessed meaningful jump QoQ as expected as Q1FY23 was impacted on account of MTM loss. In Q2FY23 trading income was at Rs 457 crore vs a loss of Rs 6549 crore in previous quarter
As a positive surprise, Fresh slippages declined to Rs 2399 crore from Rs 9740 crore in Q1FY23. Thus, slippage ratio was at 0.33% vs 1.38% in previous quarter. Asset quality improved as GNPA ratio fell 39 bps QoQ to 3.5% while net NPA was down 20 bps QoQ to 0.8%
Provisions declined 30.8% QoQ and 60.0% YoY to Rs 3039 crore but loan loss provisions declined from Rs 4268 crore in Q1FY23 to Rs 2011 crore. Led by lower provisions and healthy top-line, PAT grew 73.9% YoY and up ~2x QoQ at Rs 13263 crore, highest ever quarterly profit
Operating expenses up 7.6% YoY and 10.5% QoQ mainly led by business related costs
We estimated 18% credit growth but bank reported overall gross credit growth at 20.8% YoY to Rs 29.5 lakh crore, led by corporate loans which was up 21.18% YoY and 18.8% YoY growth in retail segment. Foreign loans were up 30.1% YoY at Rs 4.87 lakh crore
Deposits growth came in line at 10.0% YoY to Rs 41.9 lakh crore where CASA deposits grew 5.4% YoY. Thus, CASA ratio declined slightly from 45.3% to 44.63% QoQ and 46.24% in Q2FY22
RoE touched 18% and RoA at 1.04%(qtrly annualised) after several years
We believe SBI with its humongous size has reported consistently upbeat performance with this quarter being an above par growth in earnings and return ratios. The stock long due for re- rating should see strong positive reaction. Overall strength in lending franchise, provision buffers and healthy guidance are positives and expect a healthy earnings trajectory ahead.
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