State Bank of India Q4 FY22 Earnings Conference Call Insights

Key highlights from State Bank of India (SBIN) Q4 FY22 Earnings Concall

Management Update:

• SBIN said it clocked highest ever profit of INR31,676 crores for FY22, up 55.2% YoY.

Q&A Highlights:

• Mahrukh Adajania from Edelweiss asked about breakdown of loan book by benchmark rates. Dinesh Khara Chairman replied that T-bill was about 11%, MCLR about 41% and external benchmark was about 23%, mainly repo rates.

• Mahrukh Adajania from Edelweiss also asked about a lot of PSU banks seeing slippages in small loans below INR5 crores and if SBI is seeing any pressure in this segment.  Dinesh Khara Chairman said that the bank’s smaller loan book has actually improved in terms of its NPA percentage compared to the past. So SBIN has not seen any such trend.

• Mahrukh Adajania from Edelweiss enquired if SBIN could quantify the slippage from ECLGS and the outstanding currently. Dinesh Khara Chairman answered that ECLGS outstanding is about INR32,000 crores currently and the slippages are less than 2%.

• Mahrukh Adajania from Edelweiss asked about SBIN’s outlook on corporate capex. Dinesh Khara Chairman said that SBIN’s working capital unutilized limits are about INR276,000 crores and working capital utilization has improved. And unutilized events were just about 46%.

• Mona Khetan with Dolat Capital asked about the segment-wise breakup of slippages from the INR2,800 crore slippage. Dinesh Khara Chairman replied that INR2,845 is 4Q slippage, with about INR1,200 in corporate and the same in agriculture. The remaining is retail and SME.

• Mona Khetan with Dolat Capital enquired about the restructured book and what percentage of the book has the moratorium ended and the billing started. Dinesh Khara Chairman replied that for 50% of the book the moratorium has already ended and repayment has started. In home loan book, SBIN has seen a situation where people have started repaying as per the original repayment schedule.

• Gaurav Kochar from Mirae Asset asked if anything else that could come up on the security receipts provision in FY23. Dinesh Khara Chairman said that as of now it is fully provided. But only if any new securities come then only SBIN will have to look at it.

• Gaurav Kochar from Mirae Asset also asked that now since the benchmark yields have started to move up, if it’s going to affect the bond portfolio in any way. Dinesh Khara Chairman said that out of about INR14 lakh crore of treasury, SBIN’s AFS book is INR5.6 lakh crore and the duration is 2.08 of which majority is HTM. Therefore with the increasing yields, SBIN should be benefited.

• Gaurav Kochar from Mirae Asset asked about SBIN’s credit cost for FY23. Dinesh Khara Chairman answered that SBIN has set a boundary condition for itself as far as credit cost is concerned which is 1%. And the bank’s effort and endeavor is to keep it as low as possible.

• Rakesh Kumar of Systematix Group asked if the company has sold anything to ARC in 4Q and if that number is getting reflected in the NPL recovery in 4Q. Dinesh Khara Chairman said that it’s reflected in the recoveries and 4Q was 8 accounts and recovery was INR297 crores. For FY22, it’s 23 accounts and the recovery in INR1,188 crores in all and cash was INR1,105 crores.

• Abhishek Murarka with HSBC asked about margins outlook, since there is benefit of CD ratio being low but also pressure on deposit rates. Dinesh Khara Chairman said the on margins, the kind of trend SBIN observed, the deposit interest rates move up with a lag and considering the 74% of the book is linked to MCLR, EBLR, and T-bill, SBIN should be in a position to see an improvement in NIM.