Brokerages cheer SBI’s steady Q1 show, upbeat on asset quality
Shares of State Bank of India (SBI) gained by a percent to Rs 816 on August 11 after the lender reported steady June quarter results, with higher treasury income helping profit surpass Street expectations. Analysts remain largely positive, pointing to the management’s guidance on stable asset quality and margins as important positives.
HSBC maintained a “buy” rating with a target price of Rs 960 per share, saying the bank is well-positioned to deliver healthy loan growth while safeguarding margins.
CLSA also gave a “buy” call with a target price of Rs 1,050 per share, highlighting stable asset quality. The brokerage noted that SBI’s pre-tax profit beat estimates by 32 percent, supported by core pre-provision operating profit (PPoP) and benign credit costs.
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Jefferies was equally upbeat, with a “buy” rating and a target of Rs 970 per share, citing management’s retained return on assets (RoA) guidance of 1 percent and domestic net interest margin (NIM) guidance of 3 percent.
On the other hand, UBS adopted a more cautious stance with a “neutral” rating and a target price of Rs 880 per share, noting that business growth was modest and the loan-to-deposit ratio moderated by 70 basis points quarter-on-quarter.
Bernstein also maintained a “market perform” rating, with a target price of Rs 800 per share. The brokerage said loan and deposit growth of 12 percent came at the expense of a sharper margin drop, adding that core profitability remains weak, though non-interest income gains and recoveries helped sustain RoA.
In Q1, SBI’s net profit rose 12 percent to Rs 19,160 crore from Rs 17,035 crore a year ago, driven by strong treasury gains and retail loan growth. The quarter saw significant gains from the sale of government securities, supported by policy rate cuts totaling 75 basis points, along with higher foreign exchange trading income.
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The NIM fell to 3.02 percent from 3.35 percent a year earlier, reflecting lower returns on domestic advances while deposit costs stayed high. At the end of FY25, NIM stood at 3.22 percent for the country’s largest lender, which accounts for nearly one-fifth of all outstanding bank credit in India.
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