SBI returns to being Citi's preferred PSU banking pick with stock near 52-week high
Published on 25/09/2025 07:50 AM
SBI returns to being Citi's preferred PSU banking pick with stock near 52-week highBrokerage firm Citi expects SBI to deliver a return on assets (ROA) of around 1% and a return on equity (ROE) of 14-15% during financial years 2026 and 2027.By Meghna Sen September 25, 2025, 7:50:04 AM IST (Published)2 Min ReadGlobal brokerage firm Citi has reinstated its 'Buy' rating on State Bank of India (SBI), India's largest lender, with a price target of ₹1,050 per share.
For financial years 2026 and 2027, Citi estimates loan growth of 13-14% year-on-year. It has factored in net interest margins (NIMs) on interest-earning assets (IEA) at 2.8-2.9%, along with a stable credit cost of 40-45 basis points (bps).
Based on these assumptions, Citi expects SBI to deliver a return on assets (ROA) of around 1% and a return on equity (ROE) of 14-15% during FY26-FY27E.
The brokerage added that SBI remains its top pick among public sector undertaking (PSU) banks.
Meanwhile, six state-run banks, including SBI, are likely to see passive inflows from MSCI indices if the foreign institutional investor (FII) limit in these lenders is raised to 26% from the current 20%.
SBI, where FII shareholding stands at 10%, could alone receive inflows worth $466 million, according to estimates by Nuvama Alternative.
On the earnings front, SBI reported its June quarter (Q1FY25) results on August 8. While profitability improved year-on-year, core income came in below expectations. The lender posted a net profit of ₹19,160 crore, aided largely by higher other income.
Net Interest Income (NII) or core income remained flat at ₹41,072.4 crore. Asset quality stayed stable, with gross non-performing assets (NPA) at 1.83% versus 1.82% in the previous quarter, and net NPA unchanged at 0.47%. Fresh slippages for the quarter rose to ₹7,945 crore from ₹4,222 crore in the preceding quarter.
Shares of SBI ended Wednesday's session 0.51% lower at ₹866.15, but remained close to their 52-week high, having gained 8% in the past month.Continue ReadingNote To ReadersDisclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsSBISBI share priceSBI sharesState Bank of India (SBI)