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News: State Bank of India reported healthy performance in Q2FY24 which was partially offset by one-off expense during the quarter. Credit off-take remained healthy at 12.4% YoY to ₹34.1 lakh crore, with focus on retail (15.7%), MSME (22.7%) and agri segment. Asset quality remained buoyant with slippages at ~70 bps and all time low GNPA/ NNPA ratio at 2.55%/ 0.64% (declining ~21/ 7 bps QoQ). Healthy other income and relatively steadier margins (QoQ decline of ~4 bps at 3.29%) was offset by elevated opex (owing to wage provision), resulting in 8% YoY decline in PPP at ₹19417 crore. Lower credit cost led to 8% YoY growth in earnings at ₹14330 crore.
Views: Guidance of 12-14% growth in advances in FY24E with steady margins (~3-5 bps decline in 2HFY24) remains positive. Provision on wage arrears is complete and occurrence of such one-off is ruled out in near term. Healthy business growth along with gradual improvement in RoA at ~1% is expected to boost valuation ahead.
Impact: Neutral