Margin expansion on the cards for SBI: Angel Broking

Views of Mr. Siddharth Purohit (Sr. Equity Research Analyst- Banking, Angel Broking):

"The cut in deposit rates to the tune of 50 bps( for SA account less than Rs 1 cr) is expected to have a positive bearing on the NIMs of the bank. This premise is based on the fact that the cost of borrowings shall come down which will get offsetted by the fall in lending rates, but the net net effect should be expansion in NIM for SBI. With real rates expected to be subdued, based on the soft trend of inflation expected for the coming fiscal, a cut of 50 bps will not spiral a downward trend in the outflows for the Bank. The management was categorical in stating that the flows received post demonetisation, ~60% have stayed with the bank, which gives the additional buffer that the rate cut will not result in to major outflows. With this move there is high possibility that the one year deposit rates could also see some softening. While most of the banks will try and take a cut from SBI, it is to be seen whether other banks follow suit or not. In our opinion a few pvt banks which been trying to scale up their CASA base might hold on to the rates."

Shares of STATE BANK OF INDIA was last trading in BSE at Rs.300.75 as compared to the previous close of Rs. 307.65. The total number of shares traded during the day was 988222 in over 7504 trades.

The stock hit an intraday high of Rs. 307.4 and intraday low of 299. The net turnover during the day was Rs. 298606635.

Source : Equity Bulls

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