Is weak NIM a temp hiccup for SBI?
₹38,905 crore, but was 4% lower sequentially owing to faster deposit growth of 2.4% versus loan growth of 1.1%. Lower provisions and strong growth from non-interest income meant net profit more than doubled year-on-year to ₹16,884 crore. The bank continues to maintain stable asset quality metrics, which is a bonus.
As on 30 June, gross non-performing assets (GNPA) and net NPA (NNPA) stood at 2.76% and 0.71%, respectively. Sequentially, SBI’s credit cost was stable at 0.32%. Slippages rose marginally versus Q4FY23, but analysts point out that it is more to do with seasonality and they expect this to normalise.
SBI’s cost-to-income ratio fell from 54.7% in Q4FY23 to 50.4% on the back operating efficiencies. However, its focus on branch expansion and digital infrastructure may keep operating expenses at elevated levels. In this backdrop, investors would do well to monitor trends in the bank’s cost-to-income ratio, which would have a bearing on its earnings.
In the past one year, SBI’s shares have risen by 7.5%. Re-rating hereon will depend on its capability to deliver consistent growth. “For SBI, margin decline was more than what we had expected, and the business growth was also modest this quarter.
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