State Bank of India (SBI) shares surged 5% to an all-time high on Monday after the country’s largest lender reported a record quarterly profit and said it expects credit growth to remain in double digits.

SBI’s shares jumped as much as 4.8% to a record high of Rs 622.70 in early trading, extending a recent rally that has seen the stock rise nearly 17% since mid-October, accounting for about half of its surge so far this year. 

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The stock ended 20.45 points or 3.44% at Rs 614.40 on the BSE on November 7, 2022.

The bank’s net profit jumped 73.93% year-on-year to Rs 13,265 crore in the July-September quarter, backed by improvement in interest margins and a decline in provisions for bad loans. The country’s largest lender reported a net profit of Rs 7,627 crore in Q2FY22.

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SBI’s net interest income (NII) improved 12.83% year-on-year to Rs 35,183 crore for the second quarter, as against Rs 31,184 crore last year. On a sequential basis, it increased 12.78% from Rs 31,196 crore in the April-June quarter.

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The bank’s Net Interest Margin (NIM) in domestic operations improved by 3.55% in the September quarter, against 3.50% a year ago. It improved by 5 basis points on a sequential basis, from 3.23% in the first quarter of the financial year 2023.

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Its asset quality profile improved, with gross non-performing assets (NPAs) declining 3.52% in the second quarter, from 4.9% in a year-ago period. GNPAs stood at 3.91% in June 2022. The net NPA ratio declined to 0.80% at the end of the September quarter, from 1.52% a year ago and 1.0% in the previous quarter.

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Analysts at HDFC Securities outlined that net interest margin (NIM) reflation was sharper than expected at 3.2% (a rise of 15 bps sequentially) and is expected to improve further in the short term, with full MCLR impact yet to play out.

The brokerage firm retained the ‘buy’ rating with a target price of Rs 700, rating core bank at 1.3 times the September 24 adjusted book value.