State Bank of India Performance Highlights potx

4QFY2012 Result Update | Banking May 21, 2012 State Bank of India BUY Performance Highlights CMP Target Price   Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) 11,704 11,466 2.1 8,058 45.2 Pre-prov profit* 9,597 8,130 18.0 6,080 57.8 PAT 4,050 3,263 24.1 21 NA NII Source: Company, Angel Research; Note:*write back on investments netted from treasury loss in 3QFY2012 During 4QFY2012, SBI’s reported standalone net profit of `4,050cr as against `21cr in 4QFY2011, which was ahead of ours as well as street estimates Sign of improvement witnessed on the asset quality front, with decline in both gross and net NPA ratios on sequentially lower slippages, was the key positive from the result We recommend a Buy on the stock with a target price of `2,486 NIM decline by 16bp qoq; NPA ratios improves sequentially on reduced slippages: During 4QFY2012, the bank’s net advances grew by 14.7% yoy driven by healthy growth in segments such as International, Agricultural and SME Overall deposits accretion remained moderate, registering a growth of 11.7% yoy The reported domestic CASA ratio stood at 46.6% (47.9% in 3QFY2012 and 49.8% in 4QFY2011) The bank’s NIM contracted for both domestic (down by 11bp qoq to 4.28%) and foreign operations (down by 24bp qoq to 1.53%) Consequently, overall NIMs for the bank contracted by 16bp to 3.89% The banks’ non-interest income (excl treasury) grew strongly by 18.1% yoy mainly on account of healthy 13.0% yoy growth in fee income On the asset-quality front, the bank’s annualized slippage ratio for the quarter came at 2.3%, significantly lower than 4.3% in 3QFY2012 and 4.2% in 2QFY2012 The NPA ratios improved sequentially with both gross and net NPA levels decreasing on an absolute basis by 1.1% and 15.9%, respectively The PCR (incl technical write-offs) also improved by 558bp qoq to 68.1% The bank restructured accounts worth `5,134cr during 4QFY2012, which included Air India’s `1,215cr, thereby taking its total restructured book to `42,744cr The slippages from the restructured book during 4QFY2012 stood at `1,361cr `2,007 `2,486 Investment Period 12 Months Stock Info Sector Banking Market Cap (` cr) 134,706 Beta 1.2 52 Week High / Low 2530/1576 Avg Daily Volume 713,026 Face Value (`) 10 BSE Sensex 16,183 Nifty 4,906 Reuters Code SBI.BO Bloomberg Code SBIN@IN Shareholding Pattern (%) Promoters 61.6 MF / Banks / Indian Fls 17.1 FII / NRIs / OCBs 11.4 Indian Public / Others Abs (%) 9.9 3m 1yr 3yr Sensex (12.3) (11.9) 17.6 SBI (20.8) (16.4) 13.3 Outlook and valuation: At the CMP, the stock is trading at 1.2x FY2014E ABV (adjusting for value of subsidiaries 1.1x FY2014E ABV) vis-à-vis its historic range of 1.3–2.3x and median of 1.7x Also, considering the bank’s dominant position and reach, high fee income, superior earnings quality and recent signs of improvement in asset quality, we recommend a Buy on the stock with a target price of `2,486 Key financials Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E NII 32,526 43,291 50,951 60,037 37.4 33.1 17.7 17.8 8,265 11,707 15,874 18,967 (9.8) 41.7 35.6 19.5 3.0 3.6 3.7 3.7 EPS (`) 130.1 174.5 236.6 282.7 P/E (x) % chg Net profit % chg NIM (%) 15.4 11.5 8.5 7.1 P/ABV (x) 2.1 1.7 1.4 1.2 RoA (%) 0.7 0.9 1.1 1.1 RoE (%) 13.3 16.7 18.6 19.3 Source: Company, Angel Research Please refer to important disclosures at the end of this report Vaibhav Agrawal 022 – 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com Varun Varma 022 – 3935 7800 Ext: 6847 varun.varma@angelbroking.com Sourabh Taparia 022 – 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com State Bank of India | 4QFY2012 Result Update Exhibit 1: 4QFY2012 performance Particulars (` cr) 4QFY12 3QFY12 Interest earned 28,696 27,661 - on Advances / Bills 22,141 6,205 102 % chg (qoq) 4QFY11 - on investments - on balance with RBI & others - on others % chg (yoy) 3.7 21,721 32.1 20,891 6.0 16,257 36.2 6,413 (3.2) 5,218 18.9 107 (5.2) 87 16.8 248 250 (0.8) 160 55.0 Interest Expended 16,992 16,196 4.9 13,663 24.4 Net Interest Income 11,704 11,466 2.1 8,058 45.2 Other income 5,264 2,996 75.7 4,815 9.3 Other income excl treasury 5,290 3,216 64.5 4,481 18.1 - Fee Income 4,216 2,642 59.6 3,731 13.0 - Treasury Income* (26) (221) (88.2) 335 (107.8) - Forex Income 335 286 17.3 245 37.0 - Others 739 289 155.5 505 46.3 16,968 14,462 17.3 12,874 31.8 Operating expenses 7,371 6,332 16.4 6,794 8.5 - Employee expenses 5,431 3,911 38.9 4,219 28.7 - Other Opex 1,940 2,420 (19.9) 2,575 (24.7) Pre-provision Profit 9,597 8,130 18.0 6,080 57.8 Provisions & Contingencies 3,140 3,277 (4.2) 4,157 (24.5) - Provisions for NPAs 2,837 3,006 (5.6) 3,264 (13.1) 27 - NA 304 (91.1) - Provisions for Std Assets 375 195 92.6 631 (40.6) - Other Provisions (98) 76 (228.8) (43) 131.4 PBT 6,456 4,853 33.0 1,923 235.8 Provision for Tax 2,406 1,590 51.4 1,902 26.5 PAT 4,050 3,263 24.1 21 NA 37.3 32.8 451bp 98.9 (6165)bp Operating income - Provisions for Investments* Effective Tax Rate (%) Source: Company, Angel Research; Note:*write back on investments netted from treasury loss in 3QFY2012 Exhibit 2: 4QFY2012 Actual vs Angel estimates Particulars (` cr) Actual Estimates Var (%) Net interest income 11,704 11,990 (2.4) Non-interest income 5,264 3,958 33.0 Operating income 16,968 15,948 6.4 Operating expenses 7,371 7,216 2.1 Pre-prov profit 9,597 8,731 9.9 Provisions & cont 3,140 3,977 (21.0) PBT 6,456 4,754 35.8 Prov for taxes 2,406 1,205 99.6 PAT 4,050 3,549 14.1 Source: Company, Angel Research May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 3: 4QFY2012 performance analysis Particulars 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) Advances (` cr) 867,579 846,266 Deposits (` cr) 1,043,647 1,000,965 Credit-to-Deposit Ratio (%) 83.1 84.5 Current deposits (` cr) 98,273 Saving deposits (` cr) CASA deposits (` cr) 2.5 756,719 4.3 933,933 11.7 81.0 210bp 79,462 23.7 107,059 (8.2) 359,847 367,896 (2.2) 323,394 11.3 458,120 447,358 2.4 430,453 6.4 Reported dom CASA ratio (%) 46.6 47.9 (133)bp 49.8 (320)bp CAR (%) 13.9 11.6 226bp 12.0 188bp 9.8 7.6 220bp 7.8 202bp 6.0 5.9 5bp 5.3 69bp 11.1 10.9 12bp 9.6 149bp 3.9 4.1 (16)bp 3.1 82bp 43.4 43.8 (34)bp 52.8 (933)bp 39,676 40,098 (1.1) 25,326 56.7 Tier CAR (%) (142)bp 14.7 Profitability Ratios (%) Cost of deposits Yield on advances Reported NIM (global) Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) 4.4 4.6 (17)bp 3.3 116bp Net NPAs (` cr) 15,819 18,803 (15.9) 12,347 28.1 1.8 2.2 (40)bp 1.6 19bp Net NPAs (%) Provision Coverage Ratio (%) 68.1 62.5 558bp 65.0 315bp Slippage ratio (%) 2.3 4.3 (200)bp 3.3 (100)bp Credit cost (%) 0.9 0.9 (8)bp 1.1 (24)bp Source: Company, Angel Research Advances growth moderate During 4QFY2012, the bank’s net advances grew by 14.7% yoy, driven by healthy 24.1% yoy growth in International loan book, 23.3% yoy growth in Agricultural advances and 16.3% yoy growth in SME loans Growth in retail advances was however lower at 10.8% yoy on account of relative slower yoy growth in home loans (14.3%) and education loans (13.2%) as compared to healthy growth of 20.9% in auto loans The bank’s loan book continues to remain well diversified, with no segment accounting for more than 20% of the total loan book Overall deposits accretion remained moderate during 4QFY2012, registering a growth of 11.7% yoy Domestic saving deposits growth was modest at 11.3% yoy which coupled with 8.2% yoy decline witnessed in volatile domestic current account deposits lead the domestic CASA deposits to grow at subdued pace of 6.4% yoy The reported domestic CASA ratio as of 4QFY2012 stood at 46.6% (47.9% in 3QFY2012 and 49.8% in 4QFY2011) May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 4: Business growth moderates Exhibit 5: CASA ratio declines Deposits YoY growth (%) 25.0 88.0 83.1 82.7 81.2 12.0 7.0 46.6 76.0 6.4 47.9 - 14.0 6.4 38.0 4QFY11 34.0 14.7 11.7 16.5 13.9 16.1 13.8 18.0 16.5 19.8 16.1 80.0 21.3 14.0 21.0 42.0 10.0 5.0 18.8 46.0 47.8 81.1 81.0 28.0 47.9 15.0 84.0 CASA yoy growth (%, RHS) 24.2 50.0 84.5 20.0 Reported domestic CASA ratio (%) 54.0 49.8 Advances YoY growth (%) 1QFY12 2QFY12 3QFY12 4QFY12 30.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 - Source: Company, Angel Research Source: Company, Angel Research Exhibit 6: Segment-wise advances growth Exhibit 7: Loan book remain well-diversified Segment (%) Large corporate 15.0 Mid-corporate 6.4 SME 24.1 Home 14.3 Auto 20.9 Education 13.2 Overall advances (net) 16.5 International 15% 23.3 International Others 3% 16.3 Agri Retail 20% Source: Company, Angel Research MidCorporate 19% Agricultural 13% Large Corporate 14% SME 16% Source: Company, Angel Research Overall NIMs dip by 16bp sequentially The bank’s NIM contracted for both domestic (down by 11bp qoq to 4.28%) and foreign operations (down by 24bp qoq to 1.53%) Consequently, overall NIMs for the bank contracted by 16bp during the quarter to 3.89% Contraction of 11bp qoq in domestic NIMs was as a result of relatively higher sequential increase registered in domestic cost of deposits and borrowings compared to 12bp qoq increase witnessed in domestic yield on advances As of 4QFY2012, the banks’ the bulk deposits stand at a low of ~11% of the overall deposits book Exhibit 8: Overall reported NIM dip by 16bp qoq (%) 4.50 (%) 4.05 4.00 3.50 Exhibit 9: partly on sequentially higher domestic CoD 3.62 3.79 6.0 3.89 5.83 5.8 5.90 5.95 3QFY12 4QFY12 5.66 5.6 3.07 5.4 3.00 5.26 5.2 2.50 5.0 2.00 4.8 4QFY11 1QFY12 Source: Company, Angel Research May 21, 2012 2QFY12 3QFY12 4QFY12 4QFY11 1QFY12 2QFY12 Source: Company, Angel Research State Bank of India | 4QFY2012 Result Update Healthy growth in fee Income and higher dividend income drive strong growth in non-interest income During 4QFY2012, non-interest income (excl treasury) for the bank grew strongly by 18.1% yoy to `5,290cr, mostly on account of healthy 13.0% yoy growth in fee income to `4,216cr, strong growth of 37.0% in forex income to `335cr and significantly higher dividend income at `515cr in 4QFY2012 as compared to `163cr in 4QFY2011 However, treasury registered a loss of `26cr during the quarter as against profit of `335cr in 4QFY2011 Exhibit 10: Strong gr in non-int income driven by healthy gr in fee income Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) 4,216 2,642 59.6 3,731 13.0 Treasury* (26) (221) (88.2) 335 (107.8) Forex 335 286 17.3 245 37.0 Dividend 515 53 873.0 163 216.4 CEB Others 224 236 (5.2) 342 (34.5) Other income 5,264 2,996 75.7 4,815 9.3 Other income excl treasury 5,290 3,216 64.5 4,481 18.1 Source: Company, Angel Research; Note:*write back on investments netted from treasury loss in 3QFY2012 NPA ratios improve sequentially on reduced slippages On the asset-quality front, the bank’s annualized slippage ratio for the quarter came at 2.3%, significantly lower than 4.3% witnessed in 3QFY2012 and 4.2% registered in 2QFY2012 Almost 90.1% slippages were witnessed in the Corporate, SME and Agri segments However on a sequential basis, slippages from both the segments- Corporate as well as SME- nearly halved to `2,417cr from `3,948cr and to `1,072cr from `2,078cr, respectively Decline in slippages from the Agri segment was relatively higher at 58.9% qoq to `462cr Even amongst the corporate and SME segments slippages, major industries witnessing sequentially higher slippages were infrastructure (`554cr vs `124cr in 3QFY2012) and textiles (`814cr vs `462cr in 3QFY2012) The NPA ratios improved sequentially with both gross and net NPA levels decreasing on an absolute basis by 1.1% and 15.9% qoq, respectively As of 4QFY2012 gross NPA ratio stands at 4.4% (4.6% in 3QFY2012), while net NPA ratio stands at 1.8% (2.2% in 3QFY2012) The provisioning coverage ratio (incl technical write-offs) also improved by 558bp during 4QFY2012 to 68.1% The bank restructured accounts worth `5,134cr during 4QFY2012 which included Air India’s `1,215cr and took their total restructured book to `42,744cr The slippages from the restructured book during 4QFY2012 stood at `1,361cr May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 11: Slippages decline on a sequential basis Slippages (%) Credit cost (%, RHS) 1.1 Gross NPAs (%) 1.2 0.9 4.0 0.9 0.9 0.9 0.9 3.0 Net NPAs (%) 72.0 67.3 4.0 3.0 68.1 68.0 65.0 63.5 0.6 2.0 62.5 64.0 2.0 4.3 2.3 4QFY11 1QFY12 2QFY12 3QFY12 1.0 4QFY12 - 60.0 4.4 1.8 4.2 4.2 2.0 3.3 3.5 1.6 3.6 3.3 1.6 0.3 1.0 - NPA coverage (%, RHS) 5.0 4.6 2.2 5.0 Exhibit 12: NPA ratios improve sequentially - 56.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 Source: Company, Angel Research Source: Company, Angel Research Exhibit 13: Break-up of provisioning expenses Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) 2,837 3,006 (5.6) 3,264 (13.1) 375 195 92.6 631 (40.6) 27 - NA 304 (91.1) (98) 76 (228.8) (43) 131.4 3,140 3,277 (4.2) 4,157 (24.5) NPA Standard assets Investments* Others Total Provisions Source: Company, Angel Research; Note:*write back on investments netted from treasury loss in 3QFY2012 Cost ratios remained at normalized levels During the quarter, staff expenses increased by 8.8% yoy to `3,821cr, while other opex increased by 15.9% yoy to `2,420cr The bank added 325 branches during the quarter (645 during FY2012) to bolster its already strong branch network to 14,097 branches Exhibit 14: Opex growth trends Particulars (` cr) Exhibit 15: Cost ratios remain at normalized levels % chg % chg 4QFY12 3QFY12 4QFY11 (qoq) (yoy) Cost-to-income ratio (%) 6.7 60.0 Contrib for employees 805 860 (6.4) 685 17.5 50.0 3,821 3,914 (2.4) 3,512 8.8 40.0 Rent, taxes and lighting 508 529 (3.8) 436 16.5 30.0 Dep on property 266 240 10.9 244 9.1 20.0 16.9 10.0 2.4 - Total staff expenses (A) Others 1,646 1,692 (2.7) 1,407 Other opex (B) 2,420 2,461 (1.6) 2,088 15.9 Total opex (A)+(B) 6,242 6,375 (2.1) 5,599 11.5 Source: Company, Angel Research May 21, 2012 2.3 2.2 2.1 1.9 2.3 2.2 2.1 2.0 2.0 1.9 43.4 2,827 43.8 (1.3) 46.0 3,055 45.3 3,017 52.8 Payment to employees Opex to average assets (%, RHS) 1.8 1.7 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 Source: Company, Angel Research State Bank of India | 4QFY2012 Result Update Performance overview of subsidiaries SBI Life reported PAT of `556cr for FY2012, (growth of 52% yoy) The AUM as of 4QFY2012 stood at `46,576cr as against `40,163cr in 4QFY2011 SBI Capital Markets registered a sharp 28% yoy decline in PAT to `251cr during FY2012, reflecting the poor capital market activity SBI Cards and Payment Services posted PAT of `38cr for FY2012 as against ~`7cr in FY2011 SBI DFHI recorded PAT of `44cr (de-growth of 23% yoy) SBI Funds Management’s average AUM as of 4QFY2012 stood at `42,042cr (`41,671 in 4QFY2011) The company recorded a PAT figure of `61cr for FY2012 (decline of 23% yoy) The overall SBI Group recorded net profit of `5,234cr and `15,973cr, respectively during 4QFY2012 and entire FY2012 Investment arguments Strong CASA franchise SBI has a strong CASA franchise (45%+) on account of its huge nationwide branch network (14,097 as of FY2012) Even in FY2012, the bank domestic CASA ratio stood at 46.6%, highest amongst all other PSU banks Strongest fee income among PSU banks SBI has a relatively strong share of fee income, owing to its strong corporate and government business relationships In FY2012, the bank continued its dominance with non-interest income/assets at 1.2% (highest among PSU banks) Outlook and valuation We expect SBI to outperform on account of its stronger core competitiveness and ample levers to deliver healthy operating income growth while managing its provisioning requirements At the CMP, the stock is trading at 1.2x FY2014E ABV (adjusting for value of subsidiaries 1.1x FY2014E ABV) vis-à-vis its historic range of 1.3–2.3x and median of 1.7x Also, considering the bank’s dominant position and reach, high fee income, superior earnings quality and recent signs of improvement in asset quality, we recommend a Buy on the stock with a target price of `2,486 May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 16: SOTP valuation summary Particulars Target multiple 1.4x FY14E ABV Life Insurance 229 13.0x FY14ENBP Associate Banks 2,145 0.7x-1.0x FY14E ABV SBI Value/share (`) 72 Others (AMC, Cap Mkt, Factors, Cards) 40 SOTP value 2,486 Source: Angel Research Exhibit 17: Key assumptions Earlier estimates Particulars (%) Revised estimates FY2013 FY2014 FY2013 FY2014 Credit growth 17.0 18.0 16.0 17.0 Deposit growth 19.0 19.0 18.0 18.0 CASA ratio 48.0 47.3 45.5 45.3 3.7 3.7 3.7 3.7 Other income growth 21.2 16.8 18.3 14.3 Growth in staff expenses 10.0 15.0 16.0 16.0 Growth in other expenses 17.0 15.0 16.0 16.0 3.7 3.6 3.4 3.3 NIMs Slippages Source: Angel Research Exhibit 18: Change in estimates Particulars (` cr) Net interest income FY2013 FY2014 Earlier Revised Revised Earlier Var (%) Var (%) estimates estimates estimates estimates 52,746 50,951 (3.4) 61,829 60,037 (2.9) Non-interest income 16,822 17,973 6.8 19,616 20,528 4.6 Operating income 69,568 68,925 (0.9) 81,445 80,565 (1.1) Operating expenses 29,802 30,240 1.5 34,272 35,078 2.4 Pre-prov profit 39,766 38,685 (2.7) 47,173 45,487 (3.6) Provisions & cont 18,024 15,390 (14.6) 20,597 17,633 (14.4) PBT 21,742 23,295 7.1 26,576 27,853 4.8 6,917 7,421 7.3 8,472 8,886 4.9 14,825 15,874 7.1 18,104 18,967 4.8 Prov for taxes PAT Source: Angel Research May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 19: P/ABV band 1.0x Price (`) 1.5x 2.0x 2.5x 3.0x 5,000 4,000 3,000 2,000 1,000 Sep-12 Feb-12 Jul-11 Dec-10 May-10 Oct-09 Mar-09 Aug-08 Jan-08 Jun-07 Nov-06 Apr-06 Source: Company, Angel Research Exhibit 20: P/E band Price (`) 9x 12x 15x 18x 5,000 4,000 3,000 2,000 1,000 May-12 Sep-11 Jan-11 May-10 Sep-09 Jan-09 May-08 Sep-07 Jan-07 May-06 Sep-05 Jan-05 Source: Company, Angel Research Exhibit 21: Premium/Discount to Sensex Apr-12 Aug-11 Dec-10 Apr-10 Avg Historical Discount Aug-09 Dec-08 Aug-07 Dec-06 Apr-06 Apr-08 Discount to Sensex 20 10 (10) (20) (30) (40) (50) (60) (70) Source: Company, Angel Research May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit 22: Angel EPS forecast vs consensus Year Angel forecast Bloomberg consensus Var (%) FY2013E 236.6 217.7 8.7 FY2014E 282.7 263.0 7.5 Source: Bloomberg, Angel Research Exhibit 23: Recommendation summary CMP (`) 963 Tgt price (`) 1,476 Upside (%) 53.3 FY2014E P/ABV (x) 1.3 FY2014E P/E (x) 6.9 FY2012-14E EPS CAGR (%) 16.4 FY2014E RoA (%) 1.5 FY2014E RoE (%) 20.3 - - 1.0 567 13.9 2.9 - 7.2 12.5 1.3 14.5 3.3 14.0 27.0 1.7 22.1 44.8 1.3 1.9 10.0 20.4 1.5 16.0 - - 450 40.1 1.0 - 5.9 4.5 0.8 17.5 1.6 2.3 7.7 22.5 1.4 23.3 166 - 13.5 0.6 0.7 3.5 6.2 0.9 17.6 - 0.6 - 4.2 3.3 0.9 16.0 666 925 39.1 0.8 1.1 4.4 11.1 1.1 18.2 353 411 16.3 0.7 1.0 4.5 23.3 0.8 16.9 48 53 10.5 0.6 0.7 3.7 45.3 0.7 17.2 393 522 33.0 0.7 0.9 4.2 11.8 0.9 16.4 76 - - 0.7 - 3.7 100.1 0.5 14.4 Buy 406 486 19.7 0.5 0.7 3.6 5.3 0.8 16.5 DenaBk Buy 86 111 28.9 0.5 0.7 3.3 6.6 0.9 17.0 IDBI# Buy 90 117 30.6 0.5 0.7 3.7 22.7 0.9 14.8 IndBk Accumulate 183 197 7.7 0.7 0.7 4.2 4.8 1.1 16.9 IOB Buy 80 96 19.9 0.5 0.6 3.7 28.3 0.6 13.9 J&KBk Accumulate 896 952 6.2 0.8 0.9 4.9 5.5 1.2 17.6 OBC Buy 219 274 24.7 0.5 0.6 3.4 27.7 0.8 14.3 PNB Buy 723 1,015 40.5 0.7 1.0 4.1 10.3 1.0 18.1 SBI* Buy 2,007 2,486 23.8 1.2 1.5 7.1 27.3 1.1 19.3 SynBk Buy 89 131 46.8 0.5 0.7 3.0 17.3 0.8 17.1 UcoBk Neutral 68 - - 0.7 - 3.8 13.0 0.6 15.4 UnionBk Buy 203 276 35.7 0.7 0.9 4.0 24.8 0.8 17.5 UtdBk Buy 57 78 36.6 0.4 0.6 2.5 22.5 0.7 16.5 VijBk Neutral 54 - - 0.6 - 4.4 13.5 0.5 13.7 Company Reco AxisBk Buy FedBk Neutral 411 HDFCBk Accumulate 497 ICICIBk* Buy 811 1,174 SIB Neutral 22 YesBk Buy 321 AllBk Accumulate 146 AndhBk Neutral 107 BOB Buy BOI Buy BOM Accumulate CanBk Buy CentBk Neutral CorpBk FY2014E Tgt P/ABV (x) 2.0 # Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), Without adjusting for SASF May 21, 2012 10 State Bank of India | 4QFY2012 Result Update Income statement Y/E March (` cr) Net Interest Income FY09 FY10 FY11 FY12 FY13E FY14E 20,873 23,671 32,526 43,291 50,951 60,037 22.6 13.4 37.4 33.1 17.7 17.8 12,691 14,968 15,825 15,221 17,973 20,528 - YoY Growth (%) Other Income - YoY Growth (%) Operating Income 35.0 17.9 5.7 (3.8) 18.1 14.2 33,565 38,640 48,351 58,512 68,925 80,565 - YoY Growth (%) Operating Expenses 27.0 15.1 25.1 21.0 17.8 16.9 15,649 20,319 23,015 26,069 30,240 35,078 24.1 29.8 13.3 13.3 16.0 16.0 17,916 18,321 25,336 32,443 38,685 45,487 29.7 2.3 38.3 28.1 19.2 17.6 3,736 4,396 10,385 13,960 15,390 17,633 10.8 17.7 136.2 34.4 10.2 14.6 14,180 13,925 14,951 18,483 23,295 27,853 - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov & Cont - YoY Growth (%) Profit Before Tax - YoY Growth (%) 35.8 (1.8) 7.4 23.6 26.0 19.6 Prov for Taxation 5,058 4,759 6,686 6,776 7,421 8,886 - as a % of PBT 35.7 44.7 36.7 31.9 31.9 9,166 8,265 11,707 15,874 18,967 35.5 - YoY Growth (%) 34.2 9,121 PAT 0.5 (9.8) 41.7 35.6 19.5 Balance sheet Y/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E 635 635 635 671 671 671 57,313 65,314 64,351 83,280 96,045 111,200 742,073 804,116 38.1 8.4 16.1 11.7 18.0 18.0 Borrowings 53,714 71,031 79,945 80,622 94,892 111,760 Tier Capital 30,344 31,980 39,624 46,384 53,805 62,952 Other Liab & Prov 80,353 80,337 105,248 80,915 94,893 111,228 Share Capital Reserves & Surplus Deposits - Growth (%) Total Liabilities 933,933 1,043,647 1,231,504 1,453,175 964,432 1,053,414 1,223,736 1,335,519 1,571,810 1,850,985 Cash balances 55,546 61,291 94,396 54,076 49,260 58,127 Bank balances 48,858 24,898 28,479 43,087 50,714 59,728 Investments 275,954 295,785 295,601 312,198 396,689 474,895 Advances 542,503 631,914 756,719 867,579 1,006,392 1,177,478 30.2 16.5 19.8 - Growth (%) 14.7 16.0 17.0 Fixed Assets 3,838 4,413 4,764 5,467 6,241 7,130 Other Assets 37,733 35,113 43,778 53,113 62,514 73,626 Total Assets - Growth (%) May 21, 2012 964,432 1,053,414 1,223,736 1,335,519 1,571,810 1,850,985 33.8 9.2 16.2 9.2 17.7 17.8 11 State Bank of India | 4QFY2012 Result Update Ratio analysis Y/E March FY09 FY10 FY11 FY12 FY13E FY14E 2.6 2.5 3.0 3.6 3.7 3.7 46.6 52.6 47.6 44.6 43.9 43.5 Profitability Ratios (%) NIMs Cost to Income Ratio RoA 1.1 0.9 0.7 0.9 1.1 1.1 RoE 18.2 15.7 13.3 16.7 18.6 19.3 CASA Ratio 41.6 47.3 49.4 46.6 45.5 45.3 Credit/Deposit Ratio 73.1 78.6 81.0 83.1 81.7 81.0 CAR 14.3 13.4 12.0 13.9 13.7 13.6 9.4 9.5 7.8 9.2 8.9 8.7 Gross NPAs 2.9 3.0 3.3 4.5 5.5 6.3 Net NPAs 1.8 1.7 1.6 1.8 1.8 1.8 Slippages 2.6 2.2 2.8 3.5 3.4 3.3 Loan Loss Prov./Avg Assets 0.3 0.5 0.7 0.9 1.0 1.0 39.2 59.2 65.0 68.1 72.5 75.0 EPS 143.7 144.4 130.1 174.5 236.6 282.7 ABVPS 824.2 972.5 967.6 1,200.1 1,416.5 1,667.1 29.0 30.0 30.0 35.0 45.5 55.0 14.0 13.9 15.4 11.5 8.5 7.1 P/ABVPS (x) 2.4 2.1 2.1 1.7 1.4 1.2 Dividend Yield 1.4 1.5 1.5 1.7 2.3 2.7 NII 2.5 2.4 2.9 3.4 3.5 3.5 (-) Prov Exp 0.4 0.4 0.9 1.1 1.1 1.0 Adj NII 2.0 1.9 2.0 2.3 2.5 2.5 Treasury 0.3 0.2 0.1 (0.0) 0.0 0.0 Int Sens Inc 2.4 2.1 2.0 2.3 2.5 2.5 Other Inc 1.2 1.3 1.3 1.2 1.2 1.2 Op Inc 3.5 3.4 3.3 3.5 3.7 3.7 Opex 1.9 2.0 2.0 2.0 2.1 2.1 PBT 1.7 1.4 1.3 1.4 1.6 1.6 Taxes 0.6 0.5 0.6 0.5 0.5 0.5 B/S ratios (%) - Tier I Asset Quality (%) Provision Coverage Per Share Data (`) DPS Valuation Ratios PER (x) DuPont Analysis (%) RoA 0.9 0.7 0.9 1.1 1.1 17.2 17.7 19.1 18.8 17.4 17.8 RoE May 21, 2012 1.1 Leverage (x) 18.2 15.7 13.3 16.7 18.6 19.3 12 State Bank of India | 4QFY2012 Result Update Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com DISCLAIMER This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision Nothing in this document should be construed as investment or financial advice Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report Angel Broking Limited has not independently verified all the information contained within this document Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section) Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report Disclosure of Interest Statement Analyst ownership of the stock State Bank of India No Angel and its Group companies ownership of the stock No Angel and its Group companies' Directors ownership of the stock No Broking relationship with company covered No Note: We have not considered any Exposure below ` lakh for Angel, its Group companies and Directors Ratings (Returns): May 21, 2012 Buy (> 15%) Reduce (-5% to -15%) Accumulate (5% to 15%) Sell (< -15%) Neutral (-5 to 5%) 13 ... Company, Angel Research State Bank of India | 4QFY2012 Result Update Performance overview of subsidiaries SBI Life reported PAT of `556cr for FY2012, (growth of 52% yoy) The AUM as of 4QFY2012 stood... to grow at subdued pace of 6.4% yoy The reported domestic CASA ratio as of 4QFY2012 stood at 46.6% (47.9% in 3QFY2012 and 49.8% in 4QFY2011) May 21, 2012 State Bank of India | 4QFY2012 Result... earnings quality and recent signs of improvement in asset quality, we recommend a Buy on the stock with a target price of `2,486 May 21, 2012 State Bank of India | 4QFY2012 Result Update Exhibit