SBI says its results will beat Street estimates from second quarter onwards

Net interest margin (NIM) — a key measure of profitability for financial institutions — for the June quarter came in at 3.23 percent, up 8 basis points from 3.15 percent YoY.

The lender witnessed a 14.9 percent loan growth in the June quarter, in line with the banking sector's credit growth in the range of 10-15 percent.

The banking sector has witnessed the highest incremental credit growth in the last three years at Rs 9.39 lakh crore. However, the credit-deposit (CD) ratio at 72.22 percent during FY2022 has been the lowest in the last 12 years.

“Overall, compared to the last year, the growth is pretty good. So credit growth has come back,” said Tewari.

According to him, companies are coming back to banks from bond markets, leading to the credit growth.

"The pricing of the risk, which was a concern in the second half of FY22 when people were chasing good assets and quoting very low prices, has been corrected to some extent," he said.

SBI stock closed 0.62 percent higher at Rs 523.80 per share on BSE. It has gained nearly 2 percent in the last month and 27.51 percent in the last one year.

For the sector, as a whole, especially for public sector undertaking (PSU) banks, asset quality has improved in the June quarter. The net non-performing asset (NPA) ratio of PSU banks is now less than 2 percent for the first time in the last 30 quarters.

“Asset quality improvement has been a secular trend for the last several quarters starting from 2020 onwards. We have seen an absolute reduction in NPAs. So while slippages have been happening at a lower pace, but because of recoveries, because of upgrades etc., the overall reduction in the NPA has been absolute and in percentage both,” explained Tewari.