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State Bank of India- Beats estimates, core performance robust….
Net profit of SBI came in line with estimates at | 28.29 billion. However,
NII growth was higher at 43% YoY to | 90.50 billion vs. estimated |
84.05 billion. This was due to NIM improving from 2.56% as on
December 2009 to 3.4% as on December 2010. Deposits grew 14.01%
YoY to | 8789 billion while advances surged 21.3% YoY to | 7266 billion.
We expect profits to grow at 21% CAGR over FY10-FY12E.
Credit, deposit growth stronger than estimated, NIMs improve…
Credit grew at 21.3% and also spread across sectors. However, top
corporate saw higher growth at 28.2% YoY to | 1105 billion and form
15% of the loan book. Even now, incrementally advances growth came
from deposits, which grew at 14.1% along with CASA improving to
48.2%, up 523 bps. Hence, NII surged 43% YoY and 12% QoQ. Quarterly
NIM stands at 3.62% as against 3.43% in Q2FY11. Against our
expectation, NIM improved in Q3. However, we believe the full impact of
rising costs will come in Q4FY11 and NIM will contract by 15-20 bps. We
expect credit growth to moderate to 19% for FY11E and then 22.2% in
FY12E and deposits to grow at 16.4% and 21.8%, respectively, leading to
NII growth at 22% CAGR over FY10-12E to | 351.5 billion.
PCR rises to 64.07%….
After the one-off rise in slippages in Q2, GNPA in Q3FY11 has declined to
3.17% from 3.35% in Q2FY11. Even on an absolute basis, GNPA rose
marginally from | 232.05 billion to 234.38billion. NNPA was also down to
1.61%. PCR (including AUCA) improved to 64.07% from 62.8% rising
gradually as guided. Of the total | 18395 crore restructured assets, | 2885
crore, 15.68% of the total, has already slipped into NPAs. This is in line
with expectation of a 15-20% slippage ratio. We expect GNPA to remain
high at 3.2-3.3% for the next two years. NNPA is estimated to come down
to 1.5% from 1.7% during the same period.
Valuation
We expect the return ratios to remain capped at 15-16% RoE and 1% RoA
for FY11-12E. A rights issue is expected in FY11 of about | 20,000 crore.
The recent correction has made valuations attractive. We have valued the
core bank at 2x FY12E ABV and assigned | 578 to its
associate/subsidiaries giving an SOTP target price of | 3068
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
State Bank of India- Beats estimates, core performance robust….
Net profit of SBI came in line with estimates at | 28.29 billion. However,
NII growth was higher at 43% YoY to | 90.50 billion vs. estimated |
84.05 billion. This was due to NIM improving from 2.56% as on
December 2009 to 3.4% as on December 2010. Deposits grew 14.01%
YoY to | 8789 billion while advances surged 21.3% YoY to | 7266 billion.
We expect profits to grow at 21% CAGR over FY10-FY12E.
Credit, deposit growth stronger than estimated, NIMs improve…
Credit grew at 21.3% and also spread across sectors. However, top
corporate saw higher growth at 28.2% YoY to | 1105 billion and form
15% of the loan book. Even now, incrementally advances growth came
from deposits, which grew at 14.1% along with CASA improving to
48.2%, up 523 bps. Hence, NII surged 43% YoY and 12% QoQ. Quarterly
NIM stands at 3.62% as against 3.43% in Q2FY11. Against our
expectation, NIM improved in Q3. However, we believe the full impact of
rising costs will come in Q4FY11 and NIM will contract by 15-20 bps. We
expect credit growth to moderate to 19% for FY11E and then 22.2% in
FY12E and deposits to grow at 16.4% and 21.8%, respectively, leading to
NII growth at 22% CAGR over FY10-12E to | 351.5 billion.
PCR rises to 64.07%….
After the one-off rise in slippages in Q2, GNPA in Q3FY11 has declined to
3.17% from 3.35% in Q2FY11. Even on an absolute basis, GNPA rose
marginally from | 232.05 billion to 234.38billion. NNPA was also down to
1.61%. PCR (including AUCA) improved to 64.07% from 62.8% rising
gradually as guided. Of the total | 18395 crore restructured assets, | 2885
crore, 15.68% of the total, has already slipped into NPAs. This is in line
with expectation of a 15-20% slippage ratio. We expect GNPA to remain
high at 3.2-3.3% for the next two years. NNPA is estimated to come down
to 1.5% from 1.7% during the same period.
Valuation
We expect the return ratios to remain capped at 15-16% RoE and 1% RoA
for FY11-12E. A rights issue is expected in FY11 of about | 20,000 crore.
The recent correction has made valuations attractive. We have valued the
core bank at 2x FY12E ABV and assigned | 578 to its
associate/subsidiaries giving an SOTP target price of | 3068
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