SBI Q1 Results: Net Profit Jumps 148% YoY On Healthy Asset Quality

State Bank of India, the country's largest lender has declared its Q1 results today. The bank reported a consolidated net profit of Rs 18,735.95 Cr in Q1FY24 up by 148% YoY from Rs 7,528.25 Cr recorded in the year-ago quarter.
SBI said its consolidated net income was Rs 1,32,332.78 Cr during the quarter under review up by 40% YoY from Rs 94,524.30 Cr recorded in Q1FY23.

On a standalone basis, SBI's net profit in Q1FY24 grew by 178% to Rs 16,884 crore from Rs 6,068 crore in Q1FY23, YoY. SBI's net interest income in the quarter ended June 2023 zoomed 24.5% to Rs 38,904 crore from Rs 31,195.9 crore recorded in the year-ago quarter on a standalone basis.

Operating Profit for the bank jumped by 98.37% YoY for Q1FY24 to Rs 25,297 crores from Rs 12,753 crores for Q1FY23. For the quarter, the bank's ROA and ROE were 1.22% and 24.42%, respectively. Gross NPA ratio at 2.76% down by 115 bps YoY while the Net NPA ratio at 0.71% down by 29 bps YoY, according to SBI. SBI reported that while its Provision Coverage Ratio (PCR), which includes AUCA, is now at 91.41%, it was down 23 basis points YoY to 74.82%. For Q1FY24, the Credit Cost fell by 29 bps YoY to 0.32%. The Capital Adequacy Ratio (CAR), which was at 14.56% at the end of Q1FY24, climbed by 113 bps YoY.

Domestic NIM for Q1FY24 climbed by 24 bps YoY to 3.47%, according to SBI. With domestic advances expanding by 15.08% YoY and foreign office advances growing at 7.44% YoY, credit growth is at 13.90% YoY during Q1FY24. According to SBI, its total bank deposits climbed by 12.00% YoY, with CASA Deposits growing by 5.57% YoY. The CASA ratio was 42.88% as of June 30. 35% of retail asset accounts and 63% of SB accounts were digitally picked up using YONO. In the first quarter of fiscal year 24, the share of alternate channels in all transactions climbed from 97% to 97.5%.

On Friday, the shares of SBI opened on the NSE at Rs 594.80 apiece and while writing this copy the scrip was trading at Rs 583.30 with a downside gap of 1.22 % over the previous close of Rs 590.50.

SBI Fundamental Analysis

Satish Kumar of Choice Broking said, "State Bank of India (SBI) reported a mixed set of numbers as core income came below estimation, while earnings trajectory sustained. The bank reported a PAT of Rs168 bn (flat of QoQ basis), higher than CEBPL's estimate of Rs154 bn. Profitability was mainly supported by a significant 25% QoQ reduction in provisioning amidst a 4% sequential decline in NII, as expected on moderation in the margin. NIM reduced by 27 bps QoQ to 3.33% as the cost of deposits increased. Fee income reduced by 17% QoQ impacted by seasonal weak business during the quarter. Cost-to-income ratio normalized to 50.4% (from 54.7% in Q4FY23) due to moderation in employee cost."

Gross slippages increased to Rs79 bn in Q1FY24 from Rs35 bn in the previous quarter. Slippages rate (annu.) increased to 94 bps (v/s 41 bps in Q4FY23). After R&U and write-offs, GNPA remained largely flat on a QoQ basis. GNPA reduced modestly by 2 bps QoQ to 2.76%. Net advances book grew by 15.0% YoY in line with management's guidance of 12-14% growth for FY24. Though, loan book growth reduced sequentially to 1.1% (v/s 4.6% QoQ in the previous quarter)," Satish Kumar said.

"Quarterly performance remained weak on a sequential basis with a decline in core income and an increase in slippages. Loan growth, though, weakened on a QoQ basis but remained in line with guidance. Currently, we have an OUTPERFORM rating on the stock with a target price of Rs 755. We may review our rating and target post attending the SBI's Analyst Meet and detailed analysis of quarterly performance. Management's commentary on margin trajectory and slippages to be noted prudently," Satish Kumar further added.

SBI Share Price Target

"SBIN has a strong support at 589 levels which is also 50 Day EMA levels. Currently, the stock is trading around 593.90. A smaller resistance is visible on the charts at 601 levels which is also 20 Day EMA level. The stock is trading above 50 and 200 Day EMA levels. Once the stock overcomes the previously mentioned resistance level of 20 Day EMA, it will be able to move closer to the all-time high levels of 630 and above. The RSI is trading comfortably at 46 levels and indicating an upward movement indicating strength. Based on the above technical analysis Investors for the medium to longer term can accumulate SBIN at a CMP of 593.90 for the target of 630 and higher, said Deven Mehata Equity Research Analyst - Choice Broking.

"SBI has been consistently under pressure since it halted its rise around 620 levels which was near previous swing high resistance formed in December 2022. The stock has given a breakdown from ascending trendline pattern on the daily charts with highest volumes in the last 3 months. The stock has also seen a bearish macd crossover on the daily charts which can keep the stock under pressure. Investors are advised to keep 552 as strict stoploss for their existing positions. This is a crucial level as SBI has been in an uptrend so far and breaking 552 will trigger a trend reversal," said Gaurav Bissa, VP, InCred Equities.

Disclaimer

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