SBI on Record High: In the December quarter, the profit of State Bank of India decreased by 7 percent. Profit has been affected due to weak other income. However, SBI shares have witnessed record breaking gains even after the profits are low. SBI has risen nearly 14 per cent in today’s business to reach a price of Rs 408. This is a 1-year high for the stock. Brokerage houses are also forming their opinion about investing in SBI after quarterly results. He says that even in the challenging environment, the operating performance of the bank has been better. Healthy recovery is being seen in every segment. Most have suggested investing in stocks.
Credit and deposit growth
SBI’s credit growth in the third quarter was 6.73 per cent year-on-year. Retail growth advances were 15.47 percent year-on-year, SME growth 5.62 percent and corporate loan growth 2.23 percent. The loan book has grown by 8.16 percent on an annual basis. At the same time, deposit growth has been 13.64 percent on an annual basis. Current account deposit growth was 11.33 percent on an annual basis, Savings Bank deposit growth was 15.99 percent on an annual basis. Net interest margin is stable at 3.12 per cent.
Collection Efficiency and Asset Quality
As of December 2020, collection efficiency in SBI’s domestic loan book has increased to 96.5 per cent, which is a very positive sign. At the same time, asset quality is showing improvement. In the third quarter, the gross NPA of the bank declined to 4.77 percent from 5.28 percent in the previous quarter. At the same time, net NPA has been reduced to 1.23 per cent from 1.59 per cent in the previous quarter.
3.7 percent growth in NII
SBI’s net interest income (NII) grew by 3.7 percent year-on-year and stood at Rs 28,819.94 crore. However, the growth in non-interest income is only 1.5 percent. Due to weak other income affected, the bank’s profit fell by 7 per cent to Rs 5196 crore. In the third quarter, the bank has provisioned an additional Rs 4,247 crore. Total provisioning was Rs 10,342 crore.
What is the opinion of the brokerage house
Brokerage house Motilal Oswal has set a target of Rs 475, while suggesting a buyout in the stock. According to Thursday’s closing price of Rs 355, it can get 34 percent return. According to the brokerage, SBI’s operating performance has been strong even after the challenges. There has been a better recovery in the retail portfolio. In many segments, disbursement has exceeded the pre covid level. Deposit growth has been strong. There is also an improvement in asset quality. The credit cast is under control. Earning is expected to increase further.
Brokerage house CLSA has also advised to invest in SBI stock and has set a target of Rs 560 for the stock. As per Thursday’s closing price of Rs 355, the stock can get 58 percent return. However, brokerage house ICICI Direct has revised the target to Rs 410, giving a hold rating in the stock. Brokerage believes that COVID provisioning may increase further.
Brokerage house Sharekhan has suggested purchase, giving a target of Rs 460. Brokerage house Nomura has set a target of Rs 550, recommending investment in the stock. While Morgan Stanley has given the target of Rs 525 giving an overweight rating.