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Serving more than 50 crore customers through a huge network of branches and digital platforms, SBI stands as the largest public sector bank in India. The shares of this company have been a consistently good performer in the market, ensuring that investors get solid returns on their investments.
If you’re looking for a diversified investment portfolio, SBI shares are a compelling choice, highlighting investor confidence. Here are the top 5 reasons why you should not miss out on adding SBI shares to your portfolio!
Robust Financial Performance
Over the last few years, SBI has had an impressive financial record. SBI’s net profit rose 24% YoY in the fourth quarter of FY24, to ₹20,698 crore 20%. The bank’s return ratios such as ROA and ROE for FY24 have also improved standing at 1.04% and 20.32%, respectively, indicating better resource utilization.
Interestingly, in Q4FY24, the bank’s financial health got a boost, with a 2.9% drop in bad loans and a 6.1% decrease in net bad loans compared to the previous quarter. SBI also announced ₹13.7 dividend per share for FY24. Investors were more happy as SBI’s stock surged over 3%, reaching a new high of ₹842 for the year with better-than-expected Q4 results.
Improving Asset Quality
SBI’s asset quality has shown great improvement in recent times. In March FY24, the bank’s gross non-performing asset (GNPA) ratio decreased to 2.24% from 2.78% in the previous year, reflecting SBI’s solid risk management and prudent lending standards.
Furthermore, the net non-performing asset (NNPA) ratio fell from 0.67% to 0.57% over the same time. This decrease implied the bank’s success in recovering and resolving non-performing assets, which in turn strengthened its financial situation.
Diversified Loan Portfolio
SBI has seen robust credit growth, notably in retail loans up by 14.68% YoY. SME and agricultural loans grew by 19% and 18% YoY, respectively. Domestic deposits rose 13% YoY, with CASA deposits accounting for 41% of total domestic deposits.
This strategic expansion further enhances SBI as a solid addition to any investment portfolio.
Solid Provisioning Coverage Ratio
SBI has a robust safety net against potential losses as shown by the consistent increase in their provisioning coverage ratio. PCR indicates the amount of funds the bank has set aside to cover possible losses from bad loans.
The bank’s PCR, which includes AUCA, is at a noteworthy 91.49% at the end of the fourth quarter of FY2024, up from 90.20% the previous year.
SBI’s commitment to sound risk management and stable asset values is demonstrated by its high PCR. This shows the bank is doing an excellent job, ensuring sufficient funds to cover any potential problems with its loans, which is a good sign for its overall financial health.
Attractive Valuation and Dividend
SBI share price is currently at an attractive valuation of ₹840+ as of July 2024, with a PE ratio of 11.09. This share is an attractive choice for investors looking for security and returns in their portfolio because of its reliable dividend history.
In FY24, SBI also declared a dividend of ₹13.7 per equity share (1,370%). This shows SBI’s commitment to sharing its profits and commitment to its shareholders. The bank has proven itself as a market leader, which gives you confidence in its stability and growth prospects.
Conclusion
SBI shares are an appealing investment opportunity for investors seeking exposure to the Indian banking sector. Analysts often forecast a higher trend for SBI’s share prices, making it a compelling choice for investors who are optimistic about the banking industry. However, it is recommended that you do thorough research on all bank nifty stocks before making any investing decisions.
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