SBIN Q3 2024-2025 Call Highlights: Deposit Mix Shift, Digital Surge and Global Expansion!

State Bank of India, one of the biggest state-owned financial institutions in India, in its Q3 earnings call confirmed meeting its credit growth guidance of 14-16% and deposit growth target of 10%, with a robust corporate loan pipeline of 483,000 crores, though operating profit declined due to MTM losses. The bank maintains a risk-adjusted return approach with a 20% target for corporate lending, while continuing its branch expansion with plans to add 400-430 branches this year. Despite margin compression from higher deposit costs, management remains confident of maintaining NIMs above 3% and credit costs around 50 bps, with strong growth across retail segments. The bank’s international operations have become significant, reaching INR6 trillion in customer credit, with a balanced portfolio across local credit, ECBs, and trade finance.

State Bank of India reported strong Q3 results with consolidated net profit surging 70% year-over-year, though this growth was partly attributed to a INR7,100 crore one-time pension expense in the previous year’s quarter and showed a 7.86% sequential decline. Total revenue reached INR167,853 crore, with interest income growing by 10% to INR117,427 crore and Net Interest Income increasing modestly by 4.09% to INR41,446 crore, while Net Interest Margin declined to 3.01%. The bank showed strong sectoral growth with gross advances up 13.49%. Asset quality improved with gross NPAs at 2.07% and net NPAs at 0.53%, supported by a provision coverage ratio of 74.6% and a healthy Capital Adequacy Ratio of 13.03%. Despite total deposits growing by 9.81% to INR52.29 trillion, CASA deposits showed modest 4.46% growth, leading to a reduced CASA ratio of 39.2%. The SBI Group’s consolidated performance was strong with a 70% rise in net profit to INR18,853 crore, though the bank’s shares traded 1.8% lower at INR752.7 following the announcement.

Continue Reading: Discover the Vital Insights from State Bank of India’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: INR167,853 crore, up 9.6% YoY.
• Net Profit: INR19,175 crore, up 70% YoY.
• Basic EPS: INR21.12, up 70.3% YoY.
• Total Deposit: INR52.29 trillion, up 9.81% YoY.
• Total Expense: INR20,532 crore, up 13.5% YoY.

Outlook:

• Financial: Expects to maintain RoE above 15% through business cycles.
• Operational: Focus on increasing current account deposits and strengthening customer outreach.
• Digital Transformation: Continued digital transformation through YONO.

 

Analyst Crossfire:

• Operating Profit & Credit Growth, Corporate Credit Pipeline (Ashok Ajmera – Ajcon Global, Ashwini Tewari – MD): SBI’s operating profit declined due to trading losses and revaluation of investments. Despite this, the bank maintains a 14%-16% YoY credit growth target and expects deposit growth of 10%, aligning with revised guidance. SBI has a ₹4.83 trillion corporate loan pipeline, with ₹2.22 trillion already sanctioned. The bank is confident of achieving its 10%-12% corporate credit growth target (C S Setty – Chairman).

 

• Margin Compression & Cost of Deposits, Xpress Credit GNPA Increase (Akshay – Autonomous): Margins declined 13 bps sequentially due to higher deposit costs and lower treasury gains. However, SBI maintains a NIM guidance of 3%+ and RoE of 15% plus. The rise in Xpress Credit GNPA from 0.77% to 1.11% is mainly due to denominator effects and industry-wide trends in unsecured loans. SBI expects double-digit growth recovery in Xpress Credit soon (C S Setty – Chairman).

 

• Forex Income Decline, Bancassurance & Right Selling (Mahrukh Adajania – Nuvama): MTM losses from forex exposures and derivative positions led to lower forex income. However, corrections in interest rates should recoup losses in Q4. SBI has implemented strict product approval processes and an internal ombudsman to ensure proper sales practices in bancassurance. SBI’s complaint rate is the lowest in the industry (Rama Mohan Rao Amara – MD, IB & Global Markets).

 

• Risk-Adjusted Returns & Capital Allocation, Deposit Growth & Branch Expansion (Piran Engineer – CLSA India): SBI maintains a 20% risk-adjusted return on capital (RAROC) benchmark for corporate credit and balances retail products based on return metrics. Business units must justify exceeding risk-weighted asset (RWA) allocations. SBI is not engaging in a rate war but aligns deposit rates to market conditions. Plans to open 500-600 new branches annually in underserved areas while strengthening customer outreach (C S Setty – Chairman, Vinay M Tonse – MD).

 

• MCLR Repricing & Margin Stability, Deposit Growth & CASA Strategy (Kunal Shah – Citigroup, Gaurav Kumar Panda – Analyst): 35 bps room remains for MCLR increases, but rate cuts may limit hikes. Repricing impacts will reflect in Q4, and margins are expected to stay above 3%. SBI sees deposit mix shifting towards term deposits but expects CASA growth through targeted customer engagement and salary accounts (C S Setty – Chairman, Saloni Narayan – DMD, Finance).

 

• SME Loan Growth Sustainability & International Book Expansion (Deepak Gupta – Analyst, Ashok Ajmera – Ajcon): SBI’s Business Rule Engine (BRE) has enabled ₹35,000 crore in SME disbursements within nine months, with improved turnaround times. Budgetary SME incentives will further drive growth. SBI’s ₹6 trillion international loan book contributes 15% to advances, focusing on trade finance and global supply chain participation. Flexible expansion allows quick scaling up or down based on market conditions (C S Setty – Chairman).