SBI Q2 Review — Earnings Growth Aided By Low Provisioning: Nirmal Bang
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Nirmal Bang Report
State Bank of India reported a net profit of Rs 76.3 billion, up 67% YoY.
Earnings growth was driven by 98% YoY/QoQ drop in provisioning, aided by write-backs on Dewan Housing Finance Corporation Ltd. resolution and drawdown of Covid-19 buffer.
Slippages declined by 74% QoQ to ~Rs 42 billion. Recoveries/upgrades were strong, leading to gross non performing assets declining by 42 basis points QoQ to 4.9%. Restructuring stands at 1.2% of loans.
Overall asset quality outlook is positive as fresh slippage risks are lower. Special mention account pool also shrank meaningfully QoQ.
We have cut our credit cost estimate for FY22, the benefit of which has been offset by family pension-related exceptional expense booked in Q2 FY22.
Overall SBI's revenue grew by 7.3% YoY, led by 10.7% YoY growth in net interest income.
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