Buy State Bank of India; target of Rs 1300: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • NIM expansion: Domestic NIM increased 11bps QoQ to 3.11%, driven by better yields and stable CoD, with the bank retaining its guidance of not less than 3%.
  • Loan growth: Loans growth was steady at 18% YoY/3.3% QoQ, aided by FCNR loans, with the bank maintaining its 14-15% YoY growth guidance.
  • Core PPOP growth: Core PPOP declined 7% QoQ, but adjusted for front-loaded opex, it was broadly stable, with the bank focusing on profitable growth.
  • Asset quality: Slippages moderated to 42/25bps, with the bank monitoring agri stress closely and expecting restructuring to be contained well below INR 100bn.

Thesis Validation Checklist

  • NIM trajectory: Watch for domestic NIM to remain stable or expand, driven by better yields and stable CoD.
  • Loan growth: Monitor loan growth to remain steady, driven by FCNR loans and a focus on profitable growth.
  • Asset quality: Track slippages and credit costs to remain moderate, with the bank's monitoring of agri stress and restructuring efforts.
  • Guidance: Watch for the bank to retain its guidance on NIM, loan growth, and RoA/RoE, indicating a stable outlook.