Prabhudas Lilladher's report on State Bank of India (SBI)"SBIN reported a tepid quarter with NII growing 3.6% YoY to Rs137.3bn, significantly short of our estimates even as strong treasury profits and controlled provisions supported net earnings. Margins in domestic business compressed by 25bp QoQ to 3.3% as deposit cost remains sticky while lending yield declined due to recent cuts in base rate. Slippages declined 26% YoY despite relatively higher slippage in the agriculture sector while restructuring stood at Rs 39.4 bn. The bank continues to see higher NPL formation in SME/mid-corporate though sounded optimistic on asset quality trends going ahead.""SBIN has been flushed with deposits as time deposits grew 18% YoY which the bank has parked into lowyielding investments. We expect margin recovery to be slow and gradual and will be a function of credit growth and deposit maturity profile. We estimate RoA to improve gradually over the next two years and maintain our PT of Rs 350. Buy the stpck", says Prabhudas Lilladher research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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