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STATE BANK OF INDIA: Key takeaways
Deposit and lending rates could see further hikes in FY2012. The bank is continuously
monitoring the formula for calculating the base rate. Against an initial formula of average
rates, the bank has tweaked the formula by including marginal cost of deposits.
Net interest margins currently at 3.6%. No near-term pressure witnessed on margins as
pricing power continues to remain strong. However, the bank is targeting margins at over
3% on a sustainable basis.
Pension liability for the employees is yet to be ascertained and the bank has made no
provisions. The bank is focusing on improving C/I ratio from current levels with the bulk
of provisions relating to staff expenses completed.
Asset quality trends are improving. However, persistent rise in interest rates can result in
pressure in SME portfolios. However, stress in export related sectors like textiles have
improved though much more is desired. No near-term concern on telecom portfolio.
Unclear on raising capital and it is likely to be deferred to FY2012. Delay in capital raising
will not slowdown loan growth. The bank would raise tier-2 capital, if needed through
retail and non retail issues. Experience from raising through retail bonds has been positive
and would look to raise intermittently depending on market conditions and capital
requirements.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
STATE BANK OF INDIA: Key takeaways
Deposit and lending rates could see further hikes in FY2012. The bank is continuously
monitoring the formula for calculating the base rate. Against an initial formula of average
rates, the bank has tweaked the formula by including marginal cost of deposits.
Net interest margins currently at 3.6%. No near-term pressure witnessed on margins as
pricing power continues to remain strong. However, the bank is targeting margins at over
3% on a sustainable basis.
Pension liability for the employees is yet to be ascertained and the bank has made no
provisions. The bank is focusing on improving C/I ratio from current levels with the bulk
of provisions relating to staff expenses completed.
Asset quality trends are improving. However, persistent rise in interest rates can result in
pressure in SME portfolios. However, stress in export related sectors like textiles have
improved though much more is desired. No near-term concern on telecom portfolio.
Unclear on raising capital and it is likely to be deferred to FY2012. Delay in capital raising
will not slowdown loan growth. The bank would raise tier-2 capital, if needed through
retail and non retail issues. Experience from raising through retail bonds has been positive
and would look to raise intermittently depending on market conditions and capital
requirements.
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