Aashish Agarwal, who is a banking analyst at CLSA has expressed his views on banking sector in particular and same is as appended below:
So we find that CLSA is in particular negative on SBI and same is probably attributable to its NPA. However since it has vast reach it is like a mega sleeping giant which can gobble any private sector bank at any given point of time. However they need to get their act together else its no. 1 position is in danger in banking sector as ICICI bank is definitely expanding at a fast pace.We have been negative on the public sector banks, so SBI has been a stock where we have been underweight for quite sometime, largely on the asset quality concerns. We haven’t really cut our numbers post second quarter because we were factoring in higher than expected NPL’s. At the same time, going forward, the second quarter was the worst in terms of asset quality. The pressures for asset quality would continue but they will be far more moderate than what we saw in the second quarter, partly in the sense that there was the automotive transmission to the NPL platform. Hence, that led to higher then expected NPL in the second quarter which is not going to be the case in the third and the fourth quarter. The trend going forward would be fairly divergent. The public sector banks would continue to see asset quality pressure far more than the private sector banks.
