Motilal Oswal: SBI Q2 Review - Asset Quality Outlook Encouraging; Valuations Extremely Compelling
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Motilal Oswal Report
State Bank of India reported a decent quarter, with healthy net interest income growth, led by margin expansion, and retail credit growth recovering to pre-Covid-19 levels.
On the asset quality front, potential slippages (without the Supreme Court order) increased to Rs 171 billion, led by the agriculture and small and medium enterprise segments.
Management indicated total restructuring of Rs 200 billion (approximately 0.9% of loans) and a total asset quality impact of Rs 600 billion (including restructuring) in FY21E, corresponding to 2.6% of loans.
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