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SBI’s slippage trajectory to moderate, say analysts

MUMBAI: State Bank of India (SBI) is expected to see a moderation in its slippage trajectory, assuming there is no third wave of the coronavirus pandemic, while credit cost may undershoot the normal cyclical trends, analysts at Motital Oswal said.

“SBI has reported a robust performance as it bravely fought off the covid-19 impact and displayed remarkable resilience in asset quality performance. The bank has been reporting continued traction in earnings, led by controlled provisions,” analysts said in a report on 3 November.

Business trends, however, remain modest, impacted by continued deleveraging by corporates, it said, adding that the bank has been able to maintain a strong control on restructured assets at 1.2% of loans, while the special mention account (SMA) pool has declined sharply.

“The management expects net interest income (NII) to remain strong and net interest margin (NIM) at 3.2-3.3%. It aims to deliver a return on equity (RoE) of 15% on a sustainable basis across cycles. Around ₹80,000 crore, which slipped during Q1 FY22, was recovered in Q1 FY22,” the report said.

SBI, the country’s largest lender, reported a 67% growth in quarterly profit on higher net interest income and lower provisions.

Net profit rose to ₹7,627 crore in the three months ended 30 September, beating analysts’ estimates, from ₹4,574 crore a year earlier, the bank said in a statement on Wednesday.

A Bloomberg survey of 16 analysts pegged SBI’s profit at ₹6,654.2 crore. Net interest income, the difference between interest earned and expended, rose 10.7% to ₹31,184 crore in the quarter. Domestic net interest margin, a measure of profitability, expanded 35 basis points (bps) to 3.5% from the preceding June quarter.

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