Motilal Oswal 's research report on State Bank of India
SBIN reported strong 1QFY21. This was led by robust NII growth with domestic NIMs improving 30bp QoQ and controlled opex. While deposit growth was strong 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.
Outlook
The proportion of moratorium book has improved further to 9.5% of terms loans (v/s 23% earlier). Further, the moratorium proportion is the lowest v/s peers. We, thus, upgrade our earnings estimate for FY21/FY22E by 8%/9% as we factor in higher NII growth. However, credit cost trends should remain high for FY21E, and thus, we estimate RoA/RoE of 0.5%/9.6% by FY22E. Maintain Buy with TP of INR285 (0.8x FY22E ABV for the bank).
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