Higher margins, lower credit costs to propel SBI's return on assets by FY21

While the bank believes higher margins and lower credit costs will propel its return on assets by FY21, some analysts expect NPAs may remain elevated

After giving the market a pleasant surprise with its July-September 2019 quarter (second quarter) results, announced last Friday, State Bank of India’s (SBI’s) management’s efforts to retain investor confidence led to an 11 per cent rise in the stock in the last two days.

The country’s largest bank, on its investor day on Wednesday, presented a strengthening picture of its balance sheet along with growth opportunities for its subsidiaries, which, in turn, would increase shareholders’ returns.

To begin with, SBI foresees its return on assets (RoA), an important profitability measure tracked by market, to reach to 0.9-1 per cent levels by 2020-21.