How did you see the SBI stock after the Q3 results announced on Saturday?

For the Dec-21 quarter, SBI reported 7.6% growth in revenues at Rs.104,528 crore on a yoy consolidated basis. If you look at the revenues on a sequential basis, it was up 3.55%. Among the key verticals, SBI saw modest revenue growth in treasury operations and retail banking but a modest fall in revenues in wholesale banking. Insurance revenues from the SBI Life subsidiary was up 27% yoy.

The important net interest income or NII for SBI was up 6.48% at Rs.30,687 crore. The ratio of CASA deposits stood at 45.74% in the case of SBI. Overall domestic advances grew 6.47% in Q3 but retail advances grew 14.6%, as is the general trend. Net interest margins improved by 6 bps yoy at 3.40%. Overall, the stock of SBI appears to be discounting the earnings at a reasonable price, all the more so after the improvement in numbers in this quarter.

Operating profits of SBI for the Dec-21 quarter were up 6.05% at Rs.20,592 crore. Credit costs stood at just 0.49% while cost to income (C/I) ratio trended lower at 52.94%. SBI improved its ROE by 452 basis points to 14.01%. Provision coverage ratio stood at 88.32% in the quarter with slippage ratio at about 0.37%. Operating margin or OPM tapered slightly from a level of 19.98% in Dec-20 to 19.70% in Dec-21 quarter.

Net profits were up 52.7% at Rs.9,555 crore largely on account of a 31% fall in provisions for loan losses at Rs.7,442 crore. Gross NPAs are now largely under control at 4.50% and that makes a case for a serious relook at SBI at these levels. The one area that needs attention is the Capital adequacy which is low at 13.23%. PAT margins improved sharply from 6.44% to 9.14% on a yoy basis in the Dec-21 quarter.