SBI is HDFC Securities’ top stock pick for next year . Here’s why

“SBI is better placed to curtail asset quality worries than many other large banks because of its quality of loan books. Moreover, ample provision coverage will curtail incremental loan loss provisions,” the domestic brokerage and research firm said in a note.

On the digitalization front, its YONO app continues to generate strong traction across all metrics. 37% of retail asset accounts and 58% of savings accounts opened through YONO in Q2FY22. Among PSU banks, SBI remains the best play on the gradual recovery in the Indian economy, with a healthy PCR, robust capitalization, a strong liability franchise and an improved asset quality outlook, HDFC Securities added.

Though, given SBI’s size and exposure, increasing geographic penetration by newer private sector banks, macro-economic risk can lead to a faster than expected decline in market share which could act as key concerns.

Shares of SBI have surged nearly 63% this year (year-to-date or YTD) whereas in a year’s period the PSU bank stock has given over 70% return.

The lender reported a 66.7% jump in its standalone profit after tax (PAT) to ₹7,627 crore in the quarter ended September, aided by higher net interest income and improvement in asset quality. It had reported a standalone profit after tax of ₹4,574 crore in the corresponding quarter of the previous fiscal. Its net interest income increased by 10.6% to ₹31,184 crore against ₹28,181 crore in the year-ago quarter.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.