SBI Q2 Review — Earnings Normalising; Asset Quality Trends Encouraging: Dolat Capital
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Dolat Capital Report
State Bank of India reported a good set of numbers with net interest income growth of 11% YoY and 30 basis points sequential improvement in net interest margin to 3.24% aided by strong recoveries.
SBI provided for the entire additional employee pension related liability of Rs 74 billion in Q2 as exceptional item without hurting return on assets, benefitting from lower provisions on account of negative net slippages and utilisation of Rs 29 billion of contingency buffers.
Asset quality metrics continued to impress with negative net slippages (best in industry), and 1.6% restructurings (in line with large peers).
Consequently, gross non-performing assets improved by 40 bps QoQ to 4.9%.
Special mention asset (1/2) book for exposures above Rs 50 million was at its lowest in last several quarters at 0.3% of advances, alluding to declining corporate stress.
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