State Bank of India Q3 FY23 Earnings Conference Call Insights

Key highlights from State Bank of India (SBIN) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:11:08] Mahrukh Adajania from Nuvama enquired about write-offs being marginally higher in 3Q23. Dinesh Khara Chairman replied that write-offs is in the normal course of the business of about INR10,000 crores. Generally write-offs were taken towards 3Q and 4Q, but this time it was in 3Q.

• [00:11:14] Mahrukh Adajania at Nuvama also asked that on the treasury bit why it’s high in 3Q23. CS Setty MD clarified that it includes some amount of write-back of the MTM process as its mark-to-market requirements have come down.

• [00:13:29] Mahrukh Adajania of Nuvama queried about the outlook on deposit growth and margins. Dinesh Khara Chairman answered that as of now, SBIN currently have an excess SLR of about 3.2 trillion. SBIN replied that in the buckets where it can attract retail deposit, the bank is ensuring that it must be in line with the market trends.

• [00:15:36] Rahul Jain with Goldman Sachs enquired about provision for employees of INR5,429 crores in 3Q23, if it’s going to be recurring quarterly number. Dinesh Khara Chairman said there is a provision relating to the wage revision of about INR996 core in 3Q23. The provision for the quarter would be around INR500 crore per month.

• [00:20:23] Ashok Ajmera of Ajcon Global asked about the corporate credit ratio for FY23 between RAM and corporate. Dinesh Khara Chairman answered that it will be more or less of where it is in the month of December.

• [00:22:41] Ashok Ajmera of Ajcon Global asked about the increase in credit cost and cost to income ratio and if that trend will continue. Dinesh Khara Chairman answered that it will be trend for 4Q23. SBIN said that beyond 4Q, it depends on how macro economy will be moving.

• [00:23:30] Ashok Ajmera of Ajcon Global also enquired about the provision on PLI for the nine months. Dinesh Khara Chairman replied that it would not be a very significant amount and will be a very small number.

• [00:27:18] Abhishek Murarka from HSBC queried about international loans outlook for next one year. Dinesh Khara Chairman answered that in dollar terms, international book has grown by about 9.15%. Currently the focus is to improve NIM of international business.

• [00:30:46] Abhishek Murarka from HSBC asked about drivers of SME book not growing for some quarters now. Dinesh Khara Chairman said that SBIN has invested well in terms of structures, capacity building and focus. This is showing improvement in SME book last quarter and current quarter.

• [00:36:21] Kunal Shah at Citigroup asked about the outlook on the corporate credit growth. Dinesh Khara Chairman answered that SBIN has got proposals in pipeline of about INR1.9 trillion and it’s yet to be availed in terms of term loan and working capital under utilization of about INR1.10 trillion.  Overall INR3 trillion is in corporate book.

• [00:38:47] Jay Mundra from B&K Securities enquired about loan growth outlook for FY23 and beyond. Dinesh Khara Chairman answered that loan growth is expected in the range of 14-16%.

• [00:42:05] Jay Mundra from B&K Securities asked about agri loan growth being lower than overall loan growth. Dinesh Khara Chairman replied that the bank has started working on agri and realignment of agri book. SBIN added that it’s on course with its internal target.

• [00:47:42] Manish Oswal with Nirmal Bang enquired about the funding environment in wholesale market given the busy 4Q. Dinesh Khara Chairman answered that the competitive rates continues to be available to SBIN and in terms of deposit, there could be some uptick on the bulk deposit rate.

• [00:50:37] Manish Shukla with Axis Capital enquired about wage revision and it assumes what rate of wage inflation. Dinesh Khara Chairman answered it’s assumes about 10% wage inflation.

• [00:52:17] Manish Shukla with Axis Capital asked about domestic LDR remaining low but borrowings going up. Dinesh Khara Chairman clarified it’s more of a market operation as the company has to evaluate all the options to ensure cost of resource remains lowest.