SBI - PPOP Conversion To PAT Gaining Traction; Asset Quality Resilient: Motilal Oswal
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Motilal Oswal Report
State Bank of India has demonstrated a strong improvement in asset quality, with gross non performing assets declining by 43% over the past three years, while provision coverage ratio increased to 68% currently from 40% four years back.
Fresh slippages moderated sharply to 1.2% in FY21 (2.5% in Q1 FY22), lower versus many of its private peers.
Advance under collection account book stood at Rs 1.72 trillion – higher than the gross non performing loan pool, with recoveries in the 6- 11% range.
Over the past five years, SBI has recovered ~Rs 400 billion from the AUCA book.
We expect the recovery trends to continue as the insolvency and bankruptcy process gains pace after a long pause due to the Covid-19 restrictions.
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