Core Insights - Non-banking finance companies (NBFCs) maintained their dominance in small-ticket loans, particularly in the segment under Rs 1 lakh, but their share of loan origination decreased to 37% from 41% [1] - Private banks also saw a decline in their share of loan origination, falling to 25% from 28% [1] - The overall personal loans outstanding increased by 3% quarter-on-quarter, with originations rising by 32% to Rs 2.92 lakh crore, driven by a 13% increase in volumes and a 17.3% jump in average ticket size to Rs 69,000 [9] Loan Segmentation - Unsecured personal loans yield higher returns compared to other retail loan segments, making them easier to grow in a consumption-driven economy like India [2][9] - Public sector banks increased their share in unsecured personal loan origination to 36% in the September quarter, up from 27% in the previous quarter, driven by a focus on larger loan amounts [9] - The asset quality in the personal loan segment remains stable, with the portfolio at risk for overdue up to 90 days decreasing to 1.6% from 1.8% a year ago, while the share of risky portfolios with over 180 days overdue rose to 5.6% from 4% [6][10] Market Dynamics - Banks have tightened underwriting standards following regulatory caution, while a digital drive is facilitating seamless growth in personal loans [7][10] - The State Bank of India (SBI) reported a 3.2% year-on-year expansion in its loan asset to Rs 3.52 lakh crore, which is nearly five times its gold loan portfolio [8] - The overall lending universe for personal loans with minimal documentation grew by 12% year-on-year to Rs 15.4 lakh crore, making it the second-largest consumption loan category after home loans [9]

Core Viewpoint - Citi has re-initiated coverage on State Bank of India (SBI) with a 'Buy' rating and a target price of Rs 1,050, reflecting a bullish outlook on the bank's growth potential and operational efficiencies [7]. Group 1: Growth Drivers - SBI is experiencing strong traction in its Xpress Credit segment, a growing corporate loan pipeline, and a renewed focus on the home loan segment, which are expected to support robust loan growth [1][7]. - For FY26–FY27E, Citi projects loan growth of 13–14% year-on-year, with net interest margins (NIMs) on interest-earning assets likely to remain in the 2.8–2.9% range [2][7]. Group 2: Financial Metrics - Citi forecasts a return on assets (ROA) at 1% and return on equity (ROE) in the range of 14–15%, indicating efficient capital utilization and improved profitability [5][7]. - Credit costs are expected to remain benign at 40–45 basis points, which supports the bank's financial outlook [2][7]. Group 3: Market Position - Citi has identified SBI as its preferred pick among public sector banks, underscoring confidence in the bank's ability to deliver sustainable growth and value in the evolving banking landscape [6][7]. - Despite some risks, Citi's outlook remains constructive, indicating a strong belief in SBI's operational capabilities [6][7].