Gains ahead for SBI: Higher NIM could lead to double digit earnings growth

Conventional wisdom suggests that a rising rate cycle is generally bad for lenders. First, a portfolio of earlier loans at lower rates becomes less valuable. Second, higher rates generally lead to lower demand for loans so banks can also suffer loss of credit volume.
 
However, the current scenario has other macro-variables playing out and those may be more favourable. A recovering economy may lead to higher credit demand from corporates, despite rising rates and there are signs that retail consumption is picking up.
 
Loan growth has accelerated – it is up 15 per cent year-on-year (YoY) -- and