SBI'S business strategy 'right on track': Deutsche Bank

German global banking and financial services company Deutsche Bank today said the only PSU bank gaining market share with right basics in retail loans is India's largest lender the State Bank of India (SBI).

The brokerage firm said the SBI is the only bank becoming more efficient with right investments in digital.

It has raised target price on SBI by 13 percent to Rs. 270 per share with a buy rating.

"SBI's business strategy focusing on net interest margin (NIM), fees and current and savings account ratio (CASA) are right on track," added Deutsche Bank.

Deutsche Bank believes the worst of non-performing loan (NPL) recognition and credit costs are behind while slippages at 2.7 percent and credit costs at 2.1 percent in FY16 should gradually improve.

The SBI's fourth quarter FY16 was impacted by more than two-fold increase in provisions and slow growth in net interest income.

Provisions for non-performing assets shot up significantly by 58.8 percent quarter-on-quarter and 143.5 percent year-on-year to Rs. 12,139.2 crore in the quarter ending March 2016.

However, Deutsche Bank expects the cost growth to be much slower than historical trends as the SBI has been addressing its cost issues.

The shares of SBI gained two percent intraday on Thursday quoting at Rs. 220.75, up Rs. 3.55 or 1.63 percent on the BSE.