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3QFY2011 Result Reviews
SBI
For 3QFY2011, State Bank of India (SBI) reported net profit growth of 13.1% qoq and 14.1%
yoy to `2,828cr, slightly below our estimates of `2,911cr, mainly on account of higher
effective tax rate of 40%. On the PBT level, the bank came in 10% above our estimates
(which were already above consensus). NII grew by healthy 11.5% qoq and 43.3% yoy to
`9,050cr. While on account of muted non-interest income, operating income grew by 27.7%
yoy to `12,364cr. Pre-provision profit grew by strong 46.5% yoy to `6,764cr. Provisions for
NPAs declined from an average of `1,950cr in 1HFY2011 to `1,632cr during 3QFY2011.
Advances grew by 6.7% qoq and 21.3% yoy, while deposits registered growth of 2.8% qoq
and 14% yoy. On the asset quality front, the bank showed signs of stabilisation, with the
annualised slippage rate falling to 2.0% from 2.7% in 1HFY2011. Net NPAs grew marginally
by 0.8% qoq compared to average growth of 7.0% qoq in the past five quarters. The bank
improved its provision coverage ratio including technical write-offs to 64.1% from 62.8% as
of 2QFY2011 and yet managed to reduce NPA provisioning expenses by ~`530cr qoq
during the quarter.
Post the recent correction in the stock, it is trading at 2.0x FY2012E ABV (without adjusting
value of subsidiaries). Going forward, we believe SBI has ample levers to deliver healthy
operating income growth even in the rising interest rate environment as well as manage its
provisioning requirements. Hence, we maintain a Buy recommendation on the stock with a
Target Price of `3,500.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
3QFY2011 Result Reviews
SBI
For 3QFY2011, State Bank of India (SBI) reported net profit growth of 13.1% qoq and 14.1%
yoy to `2,828cr, slightly below our estimates of `2,911cr, mainly on account of higher
effective tax rate of 40%. On the PBT level, the bank came in 10% above our estimates
(which were already above consensus). NII grew by healthy 11.5% qoq and 43.3% yoy to
`9,050cr. While on account of muted non-interest income, operating income grew by 27.7%
yoy to `12,364cr. Pre-provision profit grew by strong 46.5% yoy to `6,764cr. Provisions for
NPAs declined from an average of `1,950cr in 1HFY2011 to `1,632cr during 3QFY2011.
Advances grew by 6.7% qoq and 21.3% yoy, while deposits registered growth of 2.8% qoq
and 14% yoy. On the asset quality front, the bank showed signs of stabilisation, with the
annualised slippage rate falling to 2.0% from 2.7% in 1HFY2011. Net NPAs grew marginally
by 0.8% qoq compared to average growth of 7.0% qoq in the past five quarters. The bank
improved its provision coverage ratio including technical write-offs to 64.1% from 62.8% as
of 2QFY2011 and yet managed to reduce NPA provisioning expenses by ~`530cr qoq
during the quarter.
Post the recent correction in the stock, it is trading at 2.0x FY2012E ABV (without adjusting
value of subsidiaries). Going forward, we believe SBI has ample levers to deliver healthy
operating income growth even in the rising interest rate environment as well as manage its
provisioning requirements. Hence, we maintain a Buy recommendation on the stock with a
Target Price of `3,500.
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