SBI - RoA To Be Broadly Resilient; Likely Comfortable Asset Quality: ICICI Securities

ICICI Securities Report

State Bank of India, to its credit, has one of the lowest domestic loan-to-deposit ratio, strong liquidity coverage ratio and a formidable regulatory retail deposit franchise. Together, these significantly bolster the bank from the systemic issue of slower deposit growth.

While systemic loan growth has been moderating, we believe SBI has strong chances of gaining credit market share due to its improving credit delivery, strong funding franchise and idiosyncratic issues at second largest lender.

We reckon, Q2 FY25’s possible stress recognition from two sovereign exposures may be viewed as a one-off. Concerns, if any, on kitchen sinking, are unwarranted; although new chairman has the opportunity to address the anomaly of slippages recognition policy (no impact on net slippages/credit costs).

At systemic level, there seem rising concerns on MFI/unsecured asset quality; SBI appears well-placed with no exposure to MFI and credit card.

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