SBI’s 1QFY17 profit of Rs25bn, down 32% YoY, was in line with estimates. Asset quality is normalising with annualised delinquency ratio of 3.3% of past years’loans and just a 3% QoQ rise in gross NPLs. Its stressed loans and net-NPL/net-worth are also lower than PSU peers. SBI continues to enjoy a strong Casa franchise (up 14% YoY to 43% of deposits) that is helping to gain share in loans.
CLSA in a Report said,
We cut consolidated earnings for FY17 by 9% to factor in losses at subs (and by 3% for FY18). Still, SBI scores over PSU peers on asset quality, profitability and capitalisation. We upgrade SBI to BUY with an SOTP based Target Price of Rs 300 including the value of the bank at 1.7x Mar-18CL consolidated adj PB. SBI’s chairperson may retire in Sep; a smooth transition would be important
