INSUBCONTINENT EXCLUSIVE:
revive amid uncertain macros on the back of steady operating performance at pre-provisioning operating level, recoveries from large National
Company Law Tribunal (NCLT) resolutions and normalisation in credit cost, according to a broking firm.The SBI posted Rs 2,312 crore profit
turned favourable after suppressed earnings for the past several years due to issues pertaining to asset quality merger and an adverse rate
added to the stressed pool
But given the SBI's size, the new stress is manageable (2 per cent of total loans," said Motilal Oswal."The SBI is poised for an earnings
recovery led by steady operating performance at the pre-provisioning operating level (14 per cent CAGR over FY19-FY21E), recoveries from
large NCLT resolutions and normalisation in credit cost to 1.9-1.3 per cent over FY20E/FY21E against average of 3 per cent over FY16-19," it
said.The brokerage said the bank was set for earnings recovery after a long lull
After reporting sub-optimal performance in the last few years due to high opex, interest reversals and provisioning pressures, the SBI is
earnings, it added.However, FY20E will be impacted due to one-time deferred tax asset (DTA) reversal while full benefits will come in FY21
"Overall, we estimate profits to grow to Rs 19,700 crore/Rs 28,800 crore in FY20/21 (against average PAT of Rs 7,000 crore for the past 10
years), thus driving RoA/RoE to 0.7 per cent/12.7 per cent," it said.Follow TheIndianSubcontinent for latest election news and live coverage
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