SBI vs ICICI Bank shares: Which bank stock may give better return in near-term?
1 min read . Updated: 27 Feb 2023, 01:50 PM IST
Premium- State Bank of India (SBI) stays among Jefferies' top stock picks
Global brokerage house Jefferies believes that State Bank of India (SBI) is well placed to deliver growth and improved profitability without risk emanating from exposure to Adani Group, saying that the lender's focus on profitability was quite encouraging with target ROA level of 1%, which is being passed on to branch level managers as well (3Q ROA was at 1.1%).
“Opex seemed the key sticky wicket for the bank, especially due to large costs towards pension and wage resets (it is providing for 10% hike; we note that last time wages negotiation was settled at 12%). Capital raising is not an immediate plan as CET1 at 10.2% plus ROE will aid growth. It sees mid-teens loan growth, wider NIM & ROA of 1%. SBI stays among its top stock picks," the note stated. Jefferies has maintained its Buy tag on SBI shares with SOTP based target price of ₹760 apiece, implying a potential upside of over 40% from current level.
Why Nirmal Bang is bullish on ICICI Bank shares -
The brokerage recently hosted the management of ICICI Bank, represented by Abhinek Bhargava, Head - Investor Relations and Corporate Strategy and Aasim Khan, Manager - Investor Relations and Corporate Strategy, as part of its week-long Investor Conference.
“Overall, the management is quite confident about the business environment in terms of credit growth in the banking system. The management indicated that for January 2022, Retail segment volume held up well while growth in SME and Business Banking segments was healthy. However, in the Corporate segment, some slowdown is expected in various sectors as capex has been happening but at a slower pace," the note stated.
Also, the management has been confident about the overall exposure to the Adani group as most of the exposure is towards operating companies. It does not envisage asset quality issues regarding the same, it added. The brokerage remained positive on ICICI Bank given its growth outlook and earnings trajectory. It has maintained BUY on ICICI Bank stock with a target price (TP) of ₹1,171 (37% upside potential).
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.