Dolat Capital: SBI Delivers A Good Quarter; Valuations Inexpensive
Signage for the State Bank of India Ltd. (SBI) is seen at a branch in Mumbai, India (Photographer Dhiraj Singh/Bloomberg)

Dolat Capital: SBI Delivers A Good Quarter; Valuations Inexpensive

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

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.

Click on the attachment to read the full report:

Dolat Capital State Bank of India Q1FY21 Result Update.pdf


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