SBI shares have risen after strong third quarter results. What should investors do?

The lender’s net interest income (NII), the difference between accrued and expense, at over 6% 30,687 crore while the Net Interest Margin (NIM) increased to 3.40% as against 3.34% year-on-year (YoY).

SBI delivered a strong 3QFY22 and PSU Bank is reporting continued traction in earnings every quarter aided by controlled provisions, Motilal Oswal highlighted in a note. “SBI remains our belief to buy in the sector. We revise our target price 725 per share,” the brokerage said.

The gross non-performing assets (GNPA) ratio of the bank declined to 4.50% while the net NPA ratio stood at 1.34%. Its total provisions were rejected 10,090 crore to 12,137 crore in the year-ago period, as per the presentation uploaded on the exchanges. During the quarter, the bank made an additional provision of 1,700 crore as a prudent measure, SBI Chairman Dinesh Khara said.

“Asset quality improved, GNPA ratio fell by 40 basis points (bps) QoQ to 4.5%. With the asset quality outlook positive and a healthy provisioning buffer, the credit cost is expected to remain lower than in the recent past, which should aid the return ratio. The bank has reiterated its 15% RoE guidance, “Analysts at Nirmal Bang maintain buy rating on SBI stock with target price (TP). 639.

With further pick-up in utilization levels, the corporate book may start delivering better growth rates and support overall bank credit growth, the brokerage note said.

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