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- 11 Nov 2024
- ICICI Securities
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SBI REPORTED STEADY PERFORMANCE IN Q2FY25
News: SBI reported steady performance in Q2FY25, wherein asset quality remained steady, though earnings was aided by other income while margins erosion kept NII growth in single digit. Growth in advances came at 14.9% YoY to ₹39.2 lakh crore, backed by growth in corporate (18.4% YoY), agri (17.7% YoY) & SME (17.4% YoY) segments. Within retail segment (12.3% YoY), home (13.7% YoY) and personal gold loans (28.3% YoY) witnessed healthy traction, while pace in Xpress credit witnessed slowdown at 6.6% YoY and de-growth of 1.2% QoQ. Deposit accretion came at 9.1% YoY to ₹51.2 lakh crore, led by term deposit growth of 12.5% YoY while CASA ratio stood at 40.03%. Asset quality was stable with 8 bps QoQ/4 bps QoQ improvement in GNPA/NNPA to 2.13%/0.53%, & credit cost at 0.38%. Operationally, Nll increased 5.4% YoY, amid decline in margins (-8 bps QoQ) at 3.14% owing to higher accretion in term deposit and moderation in high yield Xpress loans. Other income surged 41.5% YoY due to treasury gains (130% YoY), forex income (273% YoY) and recovery from written-off accounts. Thus, operating profit saw a sharp rise of 51% YoY, and earnings rose 28% YoY (7.6% Q0Q) to ₹18,331 crore, with RoA rising 7 bps QoQ to 1.17%.
Views: Guidance across parameters kept unchanged – advances (14-16%), credit cost at ~50 bps and RoA at ~1%. Steady performance, driven by secular growth across portfolio along with steady deposit accretion and improvement in asset quality. While higher cost of liabilities accretion pressured margins, strong other income boosted profitability.
Impact: Positive