Axis Securities: SBI - Best Play Among Public Sector Banks

Axis Securities Report

State Bank of India, with business size of approximately Rs 57 trillion, is the largest commercial bank with approximately 22.8/19.7% market share in deposits/advances in India.

The bank has a strong presence in both retail liabilities (current account and savings account approximately 45%) as well as retail advances (approximately 31% of loan book) along with corporate (approximately 34% of loan book).

Due to its size, SBI drives the interest rate movements in the sector which also allows it with margin manoeuvres.The bank’s subsidiaries are strong players in their respective fields, also aided by cross sell opportunities through SBI and provide further valuation support to the parent bank.

In the last couple of years, SBI has improved its provision coverage ratio (67%) and resolved most of its legacy book which will help in keeping asset quality in check amid Covid-19 crisis.

Its moratorium book now stands at approximately 9.5% in-line with most top sector private banks. Its inherent strength lies in brand , unparalleled geographical presence and strong customer franchise.

We believe valuations are attractive as SBI, being the largest banking conglomerate alongwith its non banking affiliates, would be the biggest beneficiary of improvement in the credit cycle.

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