Deutsche Bank downgrades SBI to ‘hold’ on poor asset quality
Moneylife Digital Team 13 August 2012

The investment bank cautioned that PSU banks like State Bank of India, which have a greater exposure to SME advances, are more susceptible to non-performing advances than private banks on account of uncertain monsoon and economic outlook

 
Deutsche Bank has downgraded India’s largest public sector lender, State Bank of India (SBI), to ‘hold’ from ‘buy’ stating that June quarter was one of the worst quarter for the PSU bank due to its poor asset quality, according to a media report.
 
Deutsche added that the decline in SBI’s interest margin to 3.57% in the June quarter, down 18 basis points, is not expected to help the bank much in boosting its asset quality.
 
The global investment bank cautioned that PSU banks, which have a greater exposure to SME advances, are more susceptible to non-performing advances than private banks. This is on account of uncertain monsoon and economic outlook, Deutsche added.
 
Meanwhile, Morgan Stanley maintained SBI at ‘underweight’, and cut its target price to Rs1,390 from Rs1,425 citing weak trends in margins and non-performing loans in a report dated Sunday.
 
SBI was trading down 0.21% at Rs1,883.95 on the BSE in post-noon trade. 
 
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