Net Profit: INR16,891 crores, up 84% year-on-year. Whole Bank Credit Growth: 13.49% year-on-year. Domestic Credit Growth: 14.06% year-on-year. CD Ratio: 68.94%. Slippage Ratio: 0.39%. Retail Personal Slippage Ratio: 0.32%. Credit Cost: 0.24%. PCR (Provision Coverage Ratio): 74.66%. Total Deposits Growth: 9.81% year-on-year to INR52.29 trillion. Term Deposits Growth: 13.47% year-on-year. Current Account Deposits Growth: 14.22% year-on-year. CASA Growth: 4.46% year-on-year with a CASA ratio of 39.2%. Domestic Advances Growth: 14.06% year-on-year. SME Growth: Over 18%. Agriculture Growth: 15%. Corporate Growth: 15%. Retail Personal Segment Growth: 11.6%. Foreign Offices Advances Growth: 10.35% year-on-year. Net NPA Ratio: Improved by 11 basis points year-on-year to 0.53%. Capital Adequacy Ratio (CAR): 13.03% without considering clawback of profits; 14.5% including profits for nine months. CET1 Ratio: 10.99% including profits for nine months. ROA (Return on Assets): Greater than 1%. ROE (Return on Equity): Greater than 20%. Total Assets: INR66.1 lakh crores. Total Advances: INR40.68 lakh crores. Total Deposits: INR52.29 lakh crores.

Warning! GuruFocus has detected 1 Warning Sign with SBKFF.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

State Bank of India (SBKFF) reported a significant year-on-year net profit increase of 84% for Q3 FY25, reaching INR16,891 crores. The bank maintained a strong asset quality with a slippage ratio of 0.39% and a credit cost of 0.24%, indicating robust risk management. Domestic credit growth was strong at 14.06% year-on-year, with notable growth in SME (18%), agriculture (15%), and corporate (15%) segments. The bank's digital banking platform, YONO, saw substantial engagement, with over 8.5 crore customers registered and 64% of regular savings accounts opened through it in Q3 FY25. State Bank of India (SBKFF) achieved a healthy capital adequacy ratio of 13.03%, which would increase to 14.5% when including profits for nine months, indicating a strong capital position.

Negative Points

Operating profit decreased significantly from INR29,294 crore in the previous quarter to INR23,551 crore, primarily due to trading losses and Forex losses. The bank's margins dropped by 13 basis points sequentially, driven by increased cost of deposits and lower treasury gains. There was a slowdown in the growth of express credit, with GNPAs in this segment increasing from 0.77% in March '24 to 1.11% as of Q3 FY25. The SMA-2 numbers increased substantially to INR7,424 crores from INR1,840 crores, although this was attributed to one major account that has since been regularized. The bank's cost of resources increased, impacting margins, and there is a concern about maintaining deposit growth without engaging in a rate war.

Story Continues

Q & A Highlights

Q: The operating profit has decreased significantly from INR29,294 crore to INR23,551 crore due to trading losses and Forex loss. What are the plans to recover this in the next quarter? A: Challa Setty, Managing Director, explained that the decrease was due to MTM losses and increased cost of resources. The bank is focusing on increasing high-quality savings accounts and expects to maintain the credit growth guidance of 14%-16% and deposit growth of 10%.

Q: With the recent budget changes increasing MSME limits, do you see growth opportunities in this sector? A: Vinay Tonse, Managing Director, noted that the changes will benefit the bank as some mid-corporates will now qualify as MSMEs, potentially increasing priority sector lending benefits. The bank has revamped its SME funding process to improve turnaround times.

Q: Margins have dropped by 13 basis points sequentially. What is causing this, and where do you see the cost of deposits stabilizing? A: Challa Setty stated that the yield on advances has been maintained, but the cost of resources, particularly deposits, has increased. The bank aims to keep NIM above 3% and is focusing on qualitative advances growth.

Q: There is a slowdown in express credit growth. Is this due to overleveraging concerns? A: Challa Setty clarified that the slowdown is due to a shift to digital lending processes and a general softening in unsecured credit. The bank expects express credit growth to return to double digits soon.

Q: What is the bank's approach towards AI and digital transformation? A: Challa Setty highlighted that SBI is focusing on enterprise-level AI with use cases in personalization, staff learning, and risk management. The bank has launched "Ask SBI" for staff to improve customer service and is working on a broader AI roadmap.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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