SBI's Q4FY19 NII came at Rs22,954cr as against Rs19,974cr, which is up by 14.9% yoy. The bank has reported a net profit of Rs838.4cr in Q4FY19, which is below consensus estimates, as against loss of Rs7,718cr yoy. Its GNPA for Q4FY19 came at 7.53% against 8.71% qoq, which has decreased by 118bps. NNPA for the quarter came at 3.01% against 3.95% qoq, which has declined by 94bps.
Loan growth was driven by the corporate and retail segments, while the international book was stable yoy.
Domestic loans grew 14% yoy, driven by corporate loans (+15% YoY) and retail loans (+19% yoy) on a gross basis. SME growth slowed to 7% yoy, while agriculture loan growth picked-up to 8% yoy. International loans were flat YoY after 3 quarters of decline.
NIM expansion of 25bps yoy aided NII growth. Core fee income growth of 3% yoy (standalone) suffers from a base effect. Cost/income ratio improved sequentially due to absence of gratuity and pension provisions. Slippages, adjusted for Jet Airways (Rs1,220cr), were nearly in line with 3QFY19. GNPA ratio declined, while PCR improved.
Margin expansion, along with improving loan growth, led to 15% yoy NII growth
Core fee income growth was muted at 3% yoy, while trading gains were sharply lower in 4QFY19 vs. 4QFY18.
The bank has reported operating profit for Rs16,933cr for the quarter as against Rs15,883cr.
The PCR for the quarter came at 78.7%.
Gross slippages for the quarter came at Rs7,691cr.
On a standalone basis, slippages in 4QFY19 stood at Rs7960cr (1.6% of opening loans) as against Rs6540cr in 3QFY19. Corporate slippages accounted for Rs2280cr (including Jet Airways Rs1220cr).
No disclosure was required with regards to the Divergence Report for FY18, since the divergence was within the RBI specified thresholds.
Key takeaways from the analyst meet
Corporate loan growth will remain strong, driven by focus on highly rated corporates.
SBIN will also continue to do project finance; however, project finance ticket sizes have been coming-off incrementally.
Current pipeline in project finance is ~Rs25,000cr.
Retail loans: Home loans have a very low stress level; LTV is ~57% and ATS is Rs2.9mn up from Rs2.6mn in FY18. Auto loans have witnessed a slowdown on account of underlying sales as well as the fact the SBIN is not being aggressive in this portfolio.
In FY19, SBIN had portfolio buyouts of ~Rs19,000cr from NBFCs and would continue to buyout quality portfolios going forward
SBIN had linked SA rates for balances above Rs0.1mn to repo rates effective May-2019. Management stated that this would continue for the foreseeable future; however, it could decide to alter spreads, depending on the inflows received.
Operating expenses in FY20 would have a benefit of ~Rs4,000cr versus FY19, due to lower provisions for gratuity (Rs2,100cr) and lower pension provisions (Rs19bn).
Two subsidiaries – SBI Cards and SBI General Insurance – are likely to be listed in FY20.
While the current level of capital is adequate, SBIN could look to raise Tier 1 capital in the next twelve months under favourable conditions.
One-time gains in FY20 could be: i) recovery of ~Rs16,000cr which depends on resolutions of three NCLT 1 accounts – Essar Steel, Bhushan Power & Steel, and Alok Industries and ii) stake sale in SBI Cards/SBI General Insurance through their listing.
State Bank of India is currently trading at Rs. 301.10, up by 1.85 points or 0.62% from its previous closing of Rs. 299.25 on the BSE.
The scrip opened at Rs. 301.95 and has touched a high and low of Rs. 302.80 and Rs. 292.20 respectively. So far 2,75,05,431 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.
Please use the temporary password sent on your email id or mobile no.
Update Mobile no.
Why you need to update your Mobile number ?
By providing verified mobile number we provide more exclusive information in the website.
Update Mobile no.
Terms & Conditions
By clicking on submit button, you authorize IIFL & its representatives & agents to provide information about various products, offers and services provided by IIFL through any mode including telephone calls, SMS, letters etc. . you confirm that laws in relation to unsolicited communication referred in National Do Not Call Registry as laid down by Telecom Regulatory Authority of India will not be applicable for such information/ communication.