IDEA2ACT - Buy: State Bank of India

Buy - SBIN

CMP (NSE) 15:59, 18 Jun

412.90 -7.35-1.75%





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Last updated on

05 Feb, 2021

SBI is the country's largest commercial bank, in terms of assets, deposits, branches and employees. On the credit front, the bank has loans of Rs23.7tn, as of FY20, implying a market share of ~23%. It has a stronghold in most segments, including SME, corporate, government, rural and international, despite inroads made by private banks. In addition to banking services, the bank, through its subsidiaries, provides a range of financial services including life and general insurance, merchant banking, mutual funds, credit cards etc.

Key highlights of 3QFY21:

• SBIN’s reported profit of Rs62.6bn was below estimate primarily due to higher operating expenses.
• Provisions of Rs108bn were made in the quarter including Rs58.85bn towards COVID.
• Loans grew 8% YoY/3% QoQ, while deposits grew 14% YoY.
• NIM adjusted for one-off interest write-back in 3QFY20, expanded ~20bps YoY.
• Pro-forma GNPL ratio declined 44bps QoQ to 5.44%. Restructured loans stood at Rs181.25bn or 0.75% of loans.
• The company reported a collection efficiency of 96.5% in 3QFY21. 

Business update

Loan growth: Management expects loan growth of 7% for FY21 (down from 8% earlier.
Digital sourcing: Of the incremental retail loans sourced in 3QFY21, 41% were sourced digitally. 
Loan mix by rate-linkage: Of the total loans, ~75% are MCLRlinked, while 15% are linked to the Repo rate.
Margins: NIM for the bank in 3QFY21 stood at 3.09%, up 2bps QoQ. SBIN did not reverse interest income on pro-forma slippages, which would have had a 8-9bps impact on margins.

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