In a recent shift of strategy, the State Bank of India (SBI) is reorienting its focus towards quality over quantity, according to a statement made by SBI Chairman Dinesh Khara in a conversation with ICICI Securities on Tuesday. This move represents a clear departure from the bank's previous top-line focus, with the bank now embedding Return on Risk-Weighted Assets (RoRWA) into branch Key Result Areas (KRAs).
SBI, a prominent player in the bank industry as per InvestingPro Tips, is projecting a robust 13-14% year-on-year credit growth, which is expected to be offset by a slight decrease in deposit growth. This is likely to result in an increase in the credit deposit ratio. SBI maintains an optimistic outlook on its growth prospects in the Small and Medium Enterprises (SME) and retail sectors, even in the face of competition within the industry.
The bank's Net Interest Margin (NIM) for the near term is predicted to either remain steady or experience a slight quarter-on-quarter dip. SBI is actively seeking to reduce its Agriculture Gross Non-Performing Assets (Agri GNPAs) to single digits. This is in line with the InvestingPro Tip that highlights SBI's consistent increase in earnings per share, indicating a strong financial performance.
In terms of capital management, SBI plans to leverage internal accruals to bolster its capital base. This strategic move aligns with the InvestingPro Tip that points out SBI's high shareholder yield, which is a sign of the bank's commitment to returning capital to its shareholders.
Despite these strategic changes, ICICI Securities continues to maintain a 'BUY' position for SBI stocks, holding steady at a target price of INR 730. This positive view is supported by InvestingPro's real-time metrics indicating a market cap of 100.72M USD and a revenue growth of 5.67% LTM2023.Q2. Moreover, SBI's stock has been trading near its 52-week high at 88.74% of the high price, and analysts predict the company will be profitable this year, as per InvestingPro Tips.
For more insights and tips, readers can visit InvestingPro which includes 18 additional tips on SBI's performance and prospects.
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