Rate hike will affect SBi for two quarters: Deven Choksey

Deven Choksey, MD, KR Choksey Securities in an interview with ET Now talks about SBI.

What did you make of the aggressive rate hike undertaken by SBI yesterday to the tune of 75 bps which is indeed the steepest increase we have seen in many months?

Yes, importantly the bank has been relatively slow in implementing the rate hike programme in the past quarters and may be probably they have seen this is as an opportunity to increase all at a one go.

In my viewpoint it is also signalling one more thing that we have probably peaked out on the rate hike kind of a situation because I would think that going forward even RBI is not likely to see larger amount of rate hike taking place which was earlier fear before the policy.

Should that be the situation SBI has completed the rate hike programme in one go, it will certainly slowdown the process of credit growth. It will certainly slowdown the process in the industrial sector where the cost would probably go high in two quarters and after that probably you would start seeing the kind of a deceleration in the rate. So these two quarters pain will have to be absorbed by the system, by the investors and I would not think that beyond that it is going to create even a major amount of negative for the banks.

We have calculated some amount of impact for SBI itself and we found that bottom line affect is relatively less even if they have implemented this particular hike, so would not be too much negative on that front though market price may come down because of sentiments.