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SBI reported a strong quarter, with PAT of Rs211bn (ROA: 1.1%) beating our estimate by 9%, driven by better NII and other income, partly offset by higher provisions. The bank continued to outpace system growth, delivering robust credit growth of 19% yoy, aided by broad-based momentum across segments. Corporate loan growth was largely flat qoq, due to ongoing repricing initiatives, with loans being migrated to MCLR-linked rates and T-bill-linked exposures renegotiated at higher yields to enhance profitability. Deposit growth moderated to ~10% yoy, while CASA ratio was stable at 37.7%. SBI expects strong FCNR(B) inflows (~Rs450bn mobilized, with only Rs70–80bn reflected in 1Q; ~Rs1trn expected) to replace bulk deposits, without any meaningful impact on NIMs. NIM expanded by 5bps qoq to 2.9%, aided by lower costs. The bank reiterated guidance of 14–15% credit growth and ~3.0% domestic NIM. We tweak our estimates and continue to expect healthy broad-based growth, supporting a normalized ROA/ROE of ~1.0%/~15% (excluding any one-off gains from subsidiaries or investments). We retain BUY and raise our TP by ~10% to Rs1,350 (from Rs1,225), as we roll forward to Jun-28E ABV, valuing SBI at 1.4x Jun-28E ABV and its subsidiaries/investments at Rs352/share.

Strong broad-based growth continues; margins improve qoq

SBI reported strong credit growth of 19% yoy/2.3% qoq, driven by healthy RAM momentum and higher corporate lending (flat qoq). However, corporate growth was hurt by ongoing repricing initiatives, with loans being migrated to MCLR-linked rates and Tbill-linked exposures renegotiated at higher yields to improve portfolio profitability. Express Credit growth moderated due to customer migration to lower-cost gold loans; SBI expects this trend to normalize over time. Strong FCNR(B) inflows (~Rs450bn mobilized, with only Rs70–80bn reflected in 1Q; ~Rs1trn expected) may replace bulk deposits without materially affecting margins. NIM improved by 5bps qoq to 2.9%, aided by lower COD; SBI guides for 14–15% credit growth and ~3.0% domestic NIM in FY27.

GNPA stays stable; ECL transition impact contained

Gross slippages rose to Rs73.6bn/0.7% of loans, primarily due to seasonal stress in the agri portfolio, though higher recoveries/upgrades helped keep GNPA stable at 1.47%. On ECL front, the impact is expected to be manageable, aided by planned capital augmentation and other potential divestments, along with the use of regulatory transition provisions. Further, the bank does not foresee any material increase in credit costs or the need to reprice loans to absorb the incremental ECL-related impact

We retain BUY on SBI

We tweak estimates and continue to expect healthy broad-based growth, supporting a normalized ROA/ROE of ~1.0%/~15% (ex one-off gains from subsidiaries or investments). We retain BUY and raise TP by ~10% to Rs1,350 (roll forward to Jun-28E ABV), valuing SBI at 1.4x Jun-28E ABV and its subsidiaries/investments at Rs352/share. Risks: Macroeconomic slowdown hurting growth/asset quality and higher treasury losses.

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