SBIN reported strong 1QFY21. This was led by robust NII growth with domestic NIMs improving 30 bps Q-o-Q and controlled opex.
SBIN reported strong 1QFY21. This was led by robust NII growth with domestic NIMs improving 30 bps Q-o-Q and controlled opex. While deposit growth was strong and led by CASA, loan growth was modest. Asset quality improved, led by lower slippages and higher provisions. Thus, PCR (incl. TWO) improved to ~86%. Moratorium book (term loans that paid less than two EMIs) declined to 9.5% of term loans v/s 23% earlier. We increase our estimate for FY21/22E by 8%/9%, led by healthy NII and business growth. Maintain ‘buy’. SBIN’s 1QFY21 PAT of Rs 41.9 billion (higher than our estimates) was led by strong NII growth, stake sale in subs
(Rs 15.4 billion) and controlled opex. The bank further built Covid-19 provisions of Rs 18.4 billion, taking the total Covid related provisions to Rs 30 billion (15% on SMA accounts overdue on 29th Feb 2020). NII grew 16% Y-o-Y (+17% Q-o-Q) to Rs 266 billion with domestic NIMs improving by 30 bps Q-o-Q to ~3.24%.
Other income grew 18% Y-o-Y, led by stake sale gains of Rs 15.4 billion in SBILIFE while opex growth moderated to 2% Y-o-Y (11% Q-o-Q decline), and thus, C/I ratio improved to 50% (v/s 52.5% in 4QFY20). Therefore, PPoP grew 36% Y-o-Y while core PPoP increased ~12% Y-o-Y. Loans grew ~8% Y-o-Y (1% Q-o-Q decline) – retail loans grew 13% Y-o-Y), international loans grew 11% Y-o-Y while corporate loans grew 3.4% Y-o-Y (4% Q-o-Q decline). Deposit growth came in strong at 16% YoY (+5.5% Q-o-Q). CASA deposits grew 17% Y-o-Y while CASA mix improved 18 bps Q-o-Q to 45.3%. Total slippages declined to Rs 39.1 billion (0.7% annualised), facilitating a 13%/18% Q-o-Q decline in GNPLs/NNPLs. PCR improved ~190 bps Q-o-Q to 67% (~86% including TWO). Overall, 90.5% of term loans have paid two or more EMIs while the rest have paid less than two EMIs – these include 4.2% in retail and SME, 3.3% in private corporates and the rest 2.0% are AAA or AA rated companies.
Moratorium availed in home loans is Rs 320 billion while in personal loans, it is Rs 110 billion. Average LTV in home loans is ~60%. Loan pipeline in the corporate segment is strong, and therefore, management expects corporate disbursements to pick up.