State Bank of India Q2 FY23 Earnings Conference Call Insights

Key highlights from State Bank of India (SBIN) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:12:07] Mahrukh Adajania of IDFC asked about margins, if for the next few quarters SBIN will continue to see margin expansion. Dinesh Khara Chairman answered that the bank will try to keep the NIM at the current levels though it might give better results QonQ.

• [00:12:56] Mahrukh Adajania of IDFC enquired about deposit growth, if the bank will continue to see flattish deposit growth. Dinesh Khara Chairman answered that the bank expects the kind of growth can be there in the deposit to support the advances growth for the remaining part of the year.

• [00:14:19] Mahrukh Adajania of IDFC also asked about the quarterly increment expectation in the wage bill for the new wage revision. Dinesh Khara Chairman replied that the estimate increase in wages if it’s 10%, SBIN expects about INR477 crore. And if it’s 12%, it is about INR580 crore.

• [00:23:39] Saurabh Kumar with JP Morgan asked about net slippage being negative in 2Q23 and what’s the outlook for the near term. Dinesh Khara Chairman replied that as of now SBIN is not envisaging any challenge. Also, the bank has built enough cushion in balance sheet to address any such challenges.

• [00:28:36] Saurabh Kumar from JP Morgan asked about the reason for an increase in the SMA1 loan book. Dinesh Khara Chairman answered that SMA is a phenomenon that’s on a particular day. So it is a number that keeps on changing and even in retail also SBIN has pulled back some of the SMEs also.

• [00:31:08] Jai Mundhra with B&K Securities enquired that in margins, if there is any one-off in interest income or it’s purely organic. Dinesh Khara Chairman answered that in 2Q23, the bank had INR592 crore as interest on income tax refund vs. INR1,900 crore last year. So considering the numbers it’s almost insignificant.

• [00:31:39] Jai Mundhra with B&K Securities asked about the breakup of the entire loan book by EBLR, MCLR, fixed rate etc. Dinesh Khara Chairman replied that almost about 75% of the book is linked to MCLR and EBLR. And out of that about 41% is MCLR linked. The remaining is EBLR linked. And fixed rate is about 21% and rest is BPLR, base rate etc.

• [00:33:44] Adarsh Parasrampuria of CLSA asked that since margins have done so well, if the bank is seeing any scope for changes in savings rate. Dinesh Khara Chairman replied that SBIN will look at the market scenario. And also, for high-value savings bank account, SBIN has already increased the interest rates.

• [00:38:20] MB Mahesh from Kotak asked if there’s a threshold limit beyond which the bank would say margins seem to be too high and would like to revisit the spreads across lending products. Dinesh Khara Chairman said that SBIN has not kept any threshold margins, but it would like to be reasonable with customers both on deposit and loan side.

• [00:40:57] Kunal Shah with ICICI Securities asked about other provisions of INR900 crores, what does that pertain to. Saloni Narayan Deputy M D of Finance replied that it is towards restructuring. And SBIN has provided 30% instead of the 5% mandatory by RBI guidance.