Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
18 December, 2014 22:48 IST

Source: | 18-Dec-14
Comments  |  Post Comment

Religare Research has upgraded State Bank Of India to 'Buy' with a price target of Rs 2540 in its report dated Dec. 02, 2012.

The State Bank Of India reported a weak 2Q. Religare sees asset quality pressures abating at the margin. NIMs could see only limited compression and may pick up with loan growth revival.

It does not expect a sharp decline in SBIN's slippages, and believes stress is at near-peak levels, especially in the mid-corporate segment.

Also, SBIN's restructuring has been lower than other PSBs and largely restricted to CDRs. PCR at 63% remains a concern but should improve as core profitability sustains and asset quality improves. 

SBIN's slippages have remained high in the last few quarters as slowdown in economic growth and adverse regulatory actions in some industries have impacted asset quality, particularly in the mid-corporate and SME segments.

GNPLs in the mid-corporate, SME and Agri segments have increased to 10%, 10% and 8% respectively. Restructuring in the mid-corporate segment is also high at 14% of the total book. 

''We do not expect slippages to decline significantly in the near term as economic slowdown would still hurt the mid-corporate and SME segments, we believe asset quality pressures would decline at the margin,'' it added.

It believes PSBs would need to raise capital to meet the higher tier I requirement. Its calculations indicate that SBIN may need fresh capital of Rs 315 billion if risk weighted assets grow by 15% CAGR (assuming PAT growth of 15% CAGR and payout ratio of 20%). Capital requirement would increase to Rs 500 billion if growth increases to 18%.

While this would lead to lower ROEs (100bps-150bps compression appears likely), it believes lower leverage would also provide more comfort. Sustainable ROEs would remain at 15%+ even at a higher core tier I ratio of 9%. ROE compression could be even lower if the amount of IPDI and PNCPs are higher or capital costs are lower. 

Click here to view full report

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.



State Bank Of India  

Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type    into this box
Related Articles
Punj Lloyd gets FIPB nod for manufacture of defence items - 18-Dec-2014 19:17
FIIs can invest up to 100% in Crompton Greaves: RBI - 18-Dec-2014 18:57
FIIs can invest up to 49% in Tree House Education: RBI - 18-Dec-2014 18:40
Logistics companies to be biggest beneficiaries of GST: Allcargo Logistics - 18-Dec-2014 16:40
IVRCL inks pact with Utico FZC to sell equity stake in its arm - 18-Dec-2014 15:46
Indusind Bank allots 51,947 shares under ESOS - 18-Dec-2014 15:25
Snapdeal ties up with Hero MotoCorp - 18-Dec-2014 13:46
Zicom launches `Ziman` new mobile application - 18-Dec-2014 13:37
Nomura cuts target on RIL; maintains `Buy` - 18-Dec-2014 12:35
Emkay maintains `Buy` on Ashoka Buildcon - 18-Dec-2014 12:17
RPP Infra Projects bags new contract worth Rs 495.46 mn - 18-Dec-2014 11:55
more...
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer