SBI Q1 FY23 Results: Net Profit Down, Asset Quality Improved

State Bank of India (SBI), the largest bank in India, reported its Q1FY23 numbers on Saturday. The results are below Street estimates. As a result, the SBI share price was down 2.5% on Monday afternoon. In 2022, SBI stock has given 10% returns to investors and has beaten the NIFTY50.

SBI Q1 FY23 Results: Key Highlights

• Profit: Rs 6068.08 crore, down 6% year on year
• Net Interest Income: Rs 31,196 crore, up 12% year on year
• NPAs: Gross NPA at 3.7% & Net NPA at 1.00%

Let us look at SBI Q1FY23 June quarter number in detail:

SBI Q1 FY23 Results: Profit Fall, Below Estimates

India’s largest bank, SBI, has reported a 6% decline in net profit to Rs 6,068.08 crore in Q1FY23, below street expectations. Analysts had earlier anticipated a profit of Rs 9,504 crore. The lower bottom line was due to market-to-market losses in treasury operations. In the March quarter, SBI reported a net profit of Rs 9,113.5 crore.

SBI Q1 Earnings: Net Interest Income Rises

One of the most crucial parameters for any bank is NII. The primary business of a bank is to borrow money and lend it at a higher rate. The income generated from the difference between the two is known as net interest income. Net interest income (NII) for the bank rose 12.87% on year to Rs 31,196 crore. Sequentially, NII reported was flat. NII is below analysts' expectations of Rs 32,500 crore. The net interest margin (NIM) for SBI during the June quarter improved 8 basis points to 3.23% compared to 3.4% in the March quarter and 3.15% in the year-ago period.

SBI Q1 FY23 Results: Asset Quality Improves

SBI reported a gross Non-Performing Asset ratio at 3.91% in the first quarter of FY23, down by 6 basis points sequentially. In Q1FY22, the gross NPA reported was 3.7%. Gross NPA stood at Rs 1.12 lakh crore. 

Net NPA declined by 77 basis points year-on-year and 2 bps, sequentially to 1.00%. The net NPA stood at Rs 28,258 crore. 

The slippage ratio stood at 1.38% against 0.43% in the previous quarter.

SBI Q1 FY23 Results: Deposits

Deposits grew 8.73% year-on-year at Rs 40.46 lakh crore. Total advances rose 14.93% year on year to Rs 29.01 lakh crore. Retail loans increased 10.57% from a year earlier and stood at Rs 10.34 lakh crore. Corporate advances stood at Rs 8.74lakh crore, up 10.57% year on year. Term deposits increased by 9.34% and stood at Rs 21.32 lakh crore.

SBI Q1 FY23 Earnings: CASA

For banks, CASA capital is the cheapest source of capital. The higher the CASA number, the more profit a bank can earn. The current account and savings account deposits increased by 6.54% to Rs 17.67 lakh compared to last year's same period. The CASA ratio was 45.33%, down 64 bps year-on-year and up 5bps. sequentially.

SBI Quarterly Results: Other Highlights

SBI's Capital Adequacy Ratio (CAR) at the end of Q1FY23 came in at 13.42% Credit Cost for the first quarter decreased by 18 basis points to 0.61% compared with last year. 

SBI Q1 Results: Share Price Target

Jefferies: The international brokerage firm has given a BUY rating for SBI post Q1FY23 numbers with a target price of Rs 630 per share. The global investment bank lowered its FY23E earnings by approximately 6% to incorporate treasury losses. MTM losses were a drag on profit but can settle now as per the firm.

HSBC: It has maintained a BUY rating for the stock with a target price of Rs 630 per share. The report by HSBC said that the firm has raised FY23-25e EPS by 3.2, 1.1%, and 0.6%, respectively. Several levers have yet to play out, and the global investment bank continues to estimate NIM expansion over FY22-25e.

Motilal Oswal: The brokerage firm has given a BUY rating with a target price of Rs 625 per share. It said treasury drags behind, but earnings are set to soar. They see a decline in margin transitory, and the asset quality improves in a seasonally weak quarter.

JP Morgan: The firm has maintained its OVERWEIGHT rating for SBI post-June numbers with a target price of Rs 650 per share. The firm report said that the growth is up and bonds are down. The NIMs are down sequentially, but the full-year trajectory still looks up. It added that the credit costs trend is below normal which adds that the asset quality is robust which is a positive sign.