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State Bank of India (SBI) is the largest commercial bank in India, with a balance sheet
size of over Rs7t. The bank, along with associate banks, has a network of over 14,000
branches across India and controls over 18% of the banking business. SBI's 3QFY11
PAT was up 14% YoY at Rs28.3b. Performance on operating parameters stood
significantly better than estimates. Some of the positive surprises are 18bp QoQ
improvement in margins , lower than estimated opex (13% lower than est) and
Stable asset quality.
Recent Key Highlights:
Margins have improved sharply by 18bp QoQ and 79bp YoY to 3.61% led by sequential
drop in cost of deposits (13bp) and stable yield on loans (+4bp on a quarterly basis).
Improvement in CASA ratio (~90bp QoQ) and CD ratio at elevated level of 77% also aided
NIMs expansion. Mgmt guided of maintaining margins at current levels. For FY12 mgmt
guided for margin of 3.3%.
Fee income grew 13% YoY, however adjusted fee income growth was higher at 21%.
Operating expenses increased 11% YoY (down 3% QoQ), 13% lower than our estimates.
With increase in benchmark yields, gratuity liability is lowered by Rs3b to Rs19b.
GNPA in absolute terms remained flat sequentially at Rs234b. PCR including technical writeoff
increased to 64% (vs 62.8% in 2QFY11).
The bank made provisions of Rs20.5b during the quarter (in line with our est) including
MTM provision of Rs2.1b. NPA provisions stood at Rs16.3b.
Valuation and view:
The stock has corrected in the very near term. We see this as a buying opportunity
and are bullish on core operating profitability. Maintain Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
State Bank of India (SBI) is the largest commercial bank in India, with a balance sheet
size of over Rs7t. The bank, along with associate banks, has a network of over 14,000
branches across India and controls over 18% of the banking business. SBI's 3QFY11
PAT was up 14% YoY at Rs28.3b. Performance on operating parameters stood
significantly better than estimates. Some of the positive surprises are 18bp QoQ
improvement in margins , lower than estimated opex (13% lower than est) and
Stable asset quality.
Recent Key Highlights:
Margins have improved sharply by 18bp QoQ and 79bp YoY to 3.61% led by sequential
drop in cost of deposits (13bp) and stable yield on loans (+4bp on a quarterly basis).
Improvement in CASA ratio (~90bp QoQ) and CD ratio at elevated level of 77% also aided
NIMs expansion. Mgmt guided of maintaining margins at current levels. For FY12 mgmt
guided for margin of 3.3%.
Fee income grew 13% YoY, however adjusted fee income growth was higher at 21%.
Operating expenses increased 11% YoY (down 3% QoQ), 13% lower than our estimates.
With increase in benchmark yields, gratuity liability is lowered by Rs3b to Rs19b.
GNPA in absolute terms remained flat sequentially at Rs234b. PCR including technical writeoff
increased to 64% (vs 62.8% in 2QFY11).
The bank made provisions of Rs20.5b during the quarter (in line with our est) including
MTM provision of Rs2.1b. NPA provisions stood at Rs16.3b.
Valuation and view:
The stock has corrected in the very near term. We see this as a buying opportunity
and are bullish on core operating profitability. Maintain Buy.
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