SBI rises 2% as bank cuts bulk deposit rates
Shares of State Bank of IndiaBSE 0.77 % (SBI) rose nearly 2 per cent in Thursday’s trade after the lender cut rates on bulk deposits by between 125 basis points and 190 basis points across various maturities, paving the way for lower interest rates in the system.
In many baskets, the revised interest rates from India’s largest bank by market share of deposits and loans are lower than the interest rates offered on savings bank accounts, which are currently set at a minimum 4 per cent.
Following the report, the stock rose 1.6 per cent to hit a high of Rs 262.90 on BSE.
A rise in deposits has lowered the blended cost of funds for lenders. SBI, meanwhile, said it would try to protect net interest margins (NIMs). It was carefully and cautiously looking at deposit rates, the lender said.
The move has come in the wake of the government’s recent move on banning Rs 500 and Rs 1,000 notes has led to Rs 5.4 lakh crore coming into banking sector as banks deposit. State Bank alone received Rs 1.5 lakh crore as deposits.
“From a valuation perspective, the SBI stock looks good. We think the problems with SBI are not as big as they have been made out to be. They are not the same as with BOB, BOI and Union Bank of IndiaBSE 0.57 %, PNBBSE 0.29 %. We find SBI relatively better than these banks,” said R Sreesankar, Head Institutional Equities at Prabhudas Lilladher.