The lender's performance was underpinned by double-digit profit growth and a massive loan book surpassing Rs 52 lakh crore during the quarter. Analysts attribute their positive targets to expanding net interest margins, benign bad-loan ratios, and optimized deposit costs. Furthermore, management remains confident in maintaining domestic margins above 3% through FY27, even as it prepares for transition costs related to the expected credit loss framework.
Key points
Emkay Global set the highest target price among peers at Rs 1,350 per share due to improv…: Emkay Global set the highest target price among peers at Rs 1,350 per share due to improving deposit dynamics.
Management reiterated long-term domestic net interest margin guidance of above 3% for the…: Management reiterated long-term domestic net interest margin guidance of above 3% for the FY27 fiscal year.
The anticipated transition to the expected credit loss framework could impact capital by…: The anticipated transition to the expected credit loss framework could impact capital by up to Rs 19,500 crore over five years.
Sources checked by our analysis pipeline: 1
The growth was supported by an expansion in the bank's loan book, which crossed Rs 52 lakh crore during the quarter. Operating profit rose 7% YoY to Rs 34,226 crore from Rs 31,904 crore. Interest income increased 10% to Rs 1.32 lakh crore, while interest expenses grew at a slower pace of 8% to Rs 82,876 crore.
Read More: SBI Q2 Results: Standalone profit rises 14% YoY to Rs 23,038 crore, NII jumps 15%
Should you buy SBI shares?
Jefferies has maintained its Buy rating on State Bank of India (SBI), with a target price of Rs 1,320 per share, implying an upside potential of 34%.The brokerage said the bank's asset quality remains strong, with gross slippages at 0.5% of loans from the past year, although the metric is not directly comparable with peers. Credit cost stood at 0.2% of average loans, while the gross non-performing loan (NPL) ratio was 1.4%. The specific coverage ratio remained stable at 74%.
Management expects the transition to the expected credit loss (ECL) framework to result in a one-time impact of Rs 1,950 crore,…
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