State Bank of India Q1 FY23 Earnings Conference Call Insights

Key highlights from State Bank of India (SBIN) Q1 FY23 Earnings Concall

Management Update:

• SBIN said its end-user mortgage portfolio for the bank had the best quarter in 1Q23.

Q&A Highlights:

• Mahrukh Adajania from Edelweiss asked about international loans, which sectors contributed most to international growth. Dinesh Khara Chairman replied that the major growth would have come from syndicated loan and trade finance. However added, sector wise split is not available.

• Mahrukh Adajania with Edelweiss enquired about maximum and average ticket size of personal loans and share of private vs. govt. Dinesh Khara Chairman answered that the avg. ticket size is INR5.97 lakh and out to this 95% is given to salary accounts. Out of the 95%, 85% is for govt. employees. 5% would be large corporates. The maximum ticket size is in the range of INR20-25 lakh.

• Mona Khetan of Dolat Capital asked about the breakup of slippages. Dinesh Khara Chairman said that the slippages is about INR9,700 crore; of this SME is INR3,000 crore, agri about INR2,700 crore, [PER] segment INR2,353 crore, CAG INR32 crore and CCG INR1,335 crore. Out of this SBI said it has already recovered INR2,800 crore.

• Mona Khetan of Dolat Capital also asked about any one-offs in terms of interest reversal in 1Q23 and the reason for sequential decline in NIMs. Dinesh Khara Chairman clarified there were no one-offs in the quarter. And on NIM decline, it’s due to last quarter having an interest on income tax refund of INR600 crore which was not available in 1Q23.

• Mona Khetan of Dolat Capital enquired about the underlying demand in retail and SME. Dinesh Khara Chairman answered that in retail, SBI has not seen the demand declining and it is expected to continue. On SME also there is a good pipeline. And in 1Q23, after many years, SME saw a growth.

• Jai Mundhra from B&K Securities asked about the sustainability of credit growth of 15% for rest of the year. Dinesh Khara Chairman replied that looking at term loan and the underutilization of working capital aggregating to INR5 trillion and the pipeline being about INR1.2 trillion, SBI is hopeful of sustaining this margin going forward.

• Kunal Shah with ICICI Securities asked about the trend with the EBLR and MCLR hike YonY. Dinesh Khara Chairman said the bank expects it to be improving. July onwards it should start improving.

• Adarsh of CLSA asked about the margin outlook incrementally. Dinesh Khara Chairman replied that the bank expects it to be in line with the trends seen in the past.

• Adarsh of CLSA also asked about the threshold to look at equity raises. Dinesh Khara Chairman clarified that SBI has a couple of other options, but it has not been deliberated at the board level so it cannot be detailed.

• Nitin Agarwal of Motilal Oswal asked if the bank had done any transfer of securities from AFS to HTM during 1Q23.  Dinesh Khara Chairman answered that the bank did the transfer of securities but the benefits could not be availed.