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Q4FY23 Preview: State Bank of India: NII seen at Rs. 39,856 crore, PAT at Rs. 14,774 crore

16 May 2023 , 12:27 PM

Result date: 18^th May, 2023

Recommendation: Buy

Target price: Rs. 700

(Source: IIFL Research)

Country’s apex bank, State Bank of India (SBI) could post ~28% growth in its Net Interest Income (NII) over the year-ago quarter. Healthy momentum in advances (up 16% year-on-year) will be a key driver of NII. While retail loans remain on a strong footing, pick up in credit demand from SMEs and Corporates could further support loan growth.

SBI’s net interest margin could inch up by a few basis points amid rising deposit costs and relatively faster repricing of loans. Pre-provisioning operating profit could increase 29% over the year-ago quarter on the back of flattish opex ratios.

The bank has witnessed continued improvement in asset quality and the trend is likely to continue in the March 2023 quarter as well. Credit costs too are expected to remain stable. Improved underwriting and significant mobilization in customer engagement by the recovery team has aided SBI’s asset quality performance. Fresh slippages have also moderated, beating private peers.

SBI’s Profit After Tax (PAT) could surge 62.1% over the year-ago quarter.

Important management insights to watch out for:

Traction in loan book across key segments, markets
Outlook on asset quality
Growth in deposits

Rs. Crore	March 2023 estimates	YoY change	QoQ change
Net Interest Income	39,856	27.7%	4.7%
Pre Provisioning Operating Profit	25,452	29.1%	0.9%
Profit After Tax	14,774	62.1%	4.0%