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Balance sheet strengthens further; RoA/RoE surpass long-term average

Tech becoming key growth enabler; net NPAs lowest in past two decades

* State Bank of India’s(SBIN) FY23 annual report highlights that the bank is steadily strengthening its balance sheet and consistently delivering healthy RoE while maintaining its leadership position.

*The bank continues to focus on building a superior loan book, as evident in a steady decline in stressed assets, improving PCR and robust loan growth (17% in FY23). *The Retail segment reported a 2.5x jump in PBT after the Corporate segment showed a 5x increase in PBT in FY22. SBIN has delivered an earnings CAGR of 51% over FY20-23 and crossed a key milestone of INR500b of profits in FY23.

*On the digital front, YONO continued to set new records with ~143m downloads and ~60m registered users, along with average daily logins of ~10.3m. SBIN sanctioned 1.39m digital loans worth INR243b and opened 64% of savings accounts through YONO in FY23. *SBIN reported further improvement in asset quality, with PCR improving to 76% (98.6% on the corporate book) in FY23. Controlled restructuring (0.8%), low SMA pool (10bp) and 100% coverage on SR portfolio provide comfort and would keep credit costs under control. We reiterate BUY with a TP of INR700.

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