Sun, May 19, 2024

SBI, ICICI, Yes Bank Downgraded; Jio Financial Hits ₹2T
4 mins well spent

SBIN: Goldman Downgrades SBI, ICICI, Yes Bank Ratings, Warns of Stronger Headwinds

Goldman Sachs Equity research company said Downgrading the profit vision of Major banks like SBI, ICICI and Yes Bank. This forecast comes from the Cost of funding being higher in the banks, and unsecured loans in these banks, which leads to credit risks. Overall management costs will be higher due to elevated inflation in India. So Profits in the Financial sector are now over in the short term.

Goldman Sachs Downgrades SBI, ICICI, Yes Bank, Warns of Challenges in Financial Sector

Goldman Sachs, a global brokerage firm, has lowered ratings for State Bank of India, ICICI Bank, and Yes Bank. The firm states that the favorable period of robust growth and visible profitability in the financial sector is over for the near term. It highlights increasing headwinds for the Indian financial services sector.


Key challenges include mounting pressure on the cost of funds due to structural funding issues and growing concerns about rising consumer leverage, posing potential asset quality challenges. Particularly in unsecured lending, higher credit costs could arise. Goldman Sachs also notes potential pressure on operating costs due to elevated wage inflation, and the necessity for expanding the distribution network for future deposit growth.

While domestic banks experienced a notable expansion in return on assets (ROA) from FY20 to 3QFY24, Goldman Sachs anticipates a moderation in ROAs. This is attributed to continued margin pressure expected to extend into FY25, slower loan growth due to stretched loan-deposit ratios, and the sector needing to address its balance-sheet mix. Additionally, the requirement for building capacity is expected to keep cost-to-income levels elevated.

STATE BANK OF INDIA Market Price is moving in Ascending channel and market has reached higher high area of the channel

STATE BANK OF INDIA Market Price is moving in Ascending channel and market has reached higher high area of the channel

Yet, the brokerage suggests that if there’s an earlier-than-expected reduction in policy rates, it could alleviate liquidity concerns in the system. Additionally, any measures taken by the central bank to ease liquidity through CRR/SLR should support deposit growth. This would particularly benefit private banks facing constraints with stretched loans-to-deposit ratios and limited buffers on liquidity coverage ratios. To some extent, it could also positively impact NBFCs experiencing elevated costs of funds due to liquidity tightness.

JIO FINANCIAL SERVICES: Jio Financial Services Hits ₹2 Trillion Market Cap; RIL Reaches New Record High

Jio Financial Services stock reached a market capitalisation of 2 lakhs crore and the stock reached a 35.00% gain this year. December quarter profit shows 293 Cr net profit, net interest income of 269Cr.

Jio Financial Services Ltd Surpasses ₹2 Trillion Market Cap with a 35% Year-to-Date Surge

Jio Financial Services achieved a market capitalization exceeding ₹2 trillion for the first time, driven by a 35% surge in its share price this year. Its parent company, Reliance Industries, also reached a record high on February 23.

As of 10:30 am, Jio Financial Services shares rose 8% to a record ₹326, marking a fifth consecutive session of gains with a nearly 17% increase over the period, resulting in a market capitalization of ₹2.08 trillion.

JIO FIN SERVICES Market Price has broken box pattern in upside

JIO FIN SERVICES Market Price has broken box pattern in upside

Reliance Industries reached an intraday record high of ₹2,989, trading at ₹2,978 on the BSE, up 0.5% from the previous close.

Currently, 39 companies trade above ₹2 trillion market capitalization on local stock exchanges, with Reliance Industries leading at ₹20.05 trillion, followed by Tata Consultancy Services and HDFC Bank at ₹14.78 trillion and ₹10.78 trillion, respectively.

In its December quarter earnings report, Jio Financial Services disclosed a net profit of ₹293 crore and a net interest income of ₹269 crore, with total interest income and revenue amounting to ₹414 crore and ₹413 crore, respectively.

Jio Financial Adopts Secure Lending Focus, Introduces New Products

Jio Financial is pivoting towards secured lending and exercising caution with unsecured products in the current market and regulatory environment. The company plans to enhance its secured lending business with the introduction of two new products. The first, “Device-as-a-service,” offers operating and financing leases for devices such as Airfiber, phones, and laptops through its subsidiary Jio Information Aggregator Services Ltd. The second, “supply-chain financing,” is a short-term, self-liquidating loan product designed to address suppliers’ working capital needs, scheduled for launch in the coming quarters, as per a B&K Securities report.


In January, Jio Financial Services, in collaboration with Blackrock Financial Management, submitted documents to the Securities and Exchange Board of India for the launch of a mutual fund business in India.

Listed on the stock exchange on August 21, 2023, Jio Financial Services has experienced a gain of over 21% since its listing.

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