State Bank of India (SBIN)’s Annual Report highlights “Resilience,” ”People,” and “Technology” as the key theme, with the endeavor to continuously strengthen the balance sheet and improve return ratios. The bank has continued to invest in cutting-edge technology to maintain its position among the most digitally-savvy banks.
The focus has remained on building a superior loan book, while maintaining strong underwriting – as evident from the robust asset quality across retail segments. This is primarily attributable to >95% of unsecured credit being offered to government/PSU employees and ~41% of corporate loans being offered to PSUs / govt. undertakings.
On a segmental basis, the Corporate segment has reported profits after four years of consecutive losses. On the other hand, Retail PBT has declined 48% YoY, impacted by pandemic-led provisions.
On the digitalization front, YONO continues to set new records with ~80m downloads and ~37m+ registered users, with average daily logins of ~10m. In FY21, YONO was further extended to overseas customers with the onboarding of ~40k customers and Rs 213b/Rs 457b worth of personal/gold loans was disbursed. SBIN has 13.2% market share in POS terminals, 29.2% in debit card spends, and 25.8% in mobile banking.
Despite a challenging year, SBIN has continued to report higher improvement in asset quality v/s private peers, with PCR improving to 71% (85% on the corporate book). Controlled restructuring (0.7%) and a low SMA book (0.5%) provide further comfort on asset quality and would drive a sustained reduction in credit cost. Maintain BUY, with TP of Rs 530 (1.1x FY23E ABV + Rs 188 from subs).