SBI pips HDFC Bank to regain most profitable lender tag after 7 years

Not surprisingly, the stellar profit also augmented SBI’s target price as brokerages increased earnings estimates between 10 percent to 18 percent for this fiscal. Shares of SBI have gained 33.4 percent in 2022, so far and analysts expect an upside of another 17 percent over the next 12 months, according to Bloomberg consensus estimates.

Shares of SBI had returned 67.5 percent last year, adding Rs 3 lakh crore to its market capitalisation between January 2021 and now. As of Monday’s close, the market capitalisation of SBI stood at Rs 5.5 lakh crore.

Analysts are of the view that SBI, the biggest Indian lender by assets, will need to focus on converting savings into term deposits as banks in the country are under pressure to expand their deposit base while demand for loans rise.

“SBI’s CASA growth continues to be weak at 5 percent year-on-year, partly reflecting conversion of savings into term deposits, which was up 6 percent y-o-y and as a result, CASA ratio has declined by 160 bps from last fiscal to 45 percfent of deposits,” wrote Jefferies in an investor note. The brokerage added that SBI’s domestic loan-to-deposit ratio is at 63 percent and offers headroom to continue growing loans without having to significantly raise deposit rates for liquidity mobilisation.

Shares of SBI rose 3.4 percent on Monday to hit a record high of Rs 614.15 on the NSE.