SBI - Risk-Calibrated Approach To Growth: Nirmal Bang

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Nirmal Bang Report.Key PointsWe hosted the management of State Bank of India, in order to gain insights into the current business outlook. The bank is confident of clocking a healthy double-digit growth, in line with system credit growth for FY24. This growth will be led by continued traction in retail, agriculture and micro small and medium enterprise segments, disbursement of corporate pipeline of Rs 3.5 trillion over the next few quarters and normalisation in international advances growth.SBI has maintained domestic net interest margin guidance at 3.5% for FY24. Despite being in a position to manage its NIM better due to ample liquidity on the balance sheet and higher risk density, it is growing in a risk calibrated manner and is more focused on strengthening structures on ground.It expects to maintain present healthy level of return on asset (1.22% in Q1 FY24), driven by prudent loan book expansion, re-pricing of marginal cost of fund based lending rate loans, higher fee and forex income and effectively managing asset quality. The fee income will be driven by cross selling and forex income; it also intends to shore up its credit linked fee income. As per FY23 annual report, SBI’s fee and forex income as % of average assets was 0.6% as against 1.2- 1.5% in case of its four largest private sector counterparts. Assuming all other financial parameters to be constant, our ‘back of the envelope’ calculations suggest that even if SBI’s proportion of fee and forex income improves by 30-50 bps in the long term, it has scope to improve its RoA to 1.5% plus.We maintain ‘Buy’ rating on SBI with a target price of Rs 698 (valued at 1.1 times June 2025E adjusted book value plus subsidiary value of Rs 183)..Click on the attachment to read the full report: .Small Finance Banks Stare At A Talent War As Attrition Jumps In FY23.DISCLAIMER This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

SBI - Risk-Calibrated Approach To Growth: Nirmal Bang

Improving share of fee based income in long term key to return on asset.

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