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The strength in unsecured loans is backed by a strong client base, with 82% of the clientele coming from the armed forces or government. The retail and small and medium enterprises (SME) sectors are expected to be key drivers for the projected 12-14% loan growth for the fiscal year 2024 (FY24).
SBI has shown superior net interest margin (NIM) performance, with a minor domestic NIM decline counterbalanced by a better loan-to-deposit ratio (LDR), currently standing at 71.3%. This indicates that SBI’s lending operations are effectively funded by its deposit base.
Looking ahead, SBI has set targets for its capital adequacy ratio (CAR) and Common Equity Tier 1 (CET-1) at 15% and 11% respectively by FY24. The bank plans to achieve this through a September 2025 accrual basis valuation (ABV) roll forward via profit plough back.
In response to these developments, Prabhudas Lilladher, a leading brokerage firm, maintains a ‘BUY’ rating for SBI at Rs. 770. The rating suggests confidence in SBI’s ability to navigate the current financial landscape and deliver on its growth targets.
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