Shares of State Bank of India (SBI) rallied 7 per cent to Rs 220.95 on the BSE in the early morning trade as the analysts believe earnings normalisation cycle for the state-owned lender has begun as the uncertainty brought about by the pandemic is receding significantly. On the asset quality front, collection efficiency (CE) improved sharply to 97 per cent, in line with large private peers. On the other hand, the bank expects a total asset quality impact of Rs 600 billion (2.6 per cent of net advances), including the restructuring of less than1 per cent. SBI has prudently improved provision coverage ratio (PCR) over the last few years, with corporate PCR at 88 per cent. It awaits healthy write-backs from the resolution of stressed assets,” note analysts at Motilal Oswal Financial Services (MOFSL).
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