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Dolat Capital Report
State Bank Of India reported a healthy net interest income growth of 16% YoY mainly driven by a sharp decline in cost of funds (44 basis points QoQ) and increased share of performing loans.
Core pre-provision operating profit (PPoP) grew at 10% YoY against an elevated overall PPoP growth of 36% YoY, which befitted from high treasury gains and SBI Life Insurance Company stake sale.
SBI provided approximately Rs 20 billion of Covid-19 related provisions during the quarter, with total standard asset provision cover at 0.2% of loans.
Moratorium ratio for term loans declined to 9.5% from 23% earlier, where borrowers paying less than two equated monthly installments (EMI)s over March -June are considered to be under moratorium.
Given the difference of approach versus other banks, we believe the number remains less comparable.
Limited earning cushion (PPoP/assets at 1.7%) along with low provision buffers remain profitability risks. The bank will also need to shore up its equity capital, though improving risk intensity is helping.
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