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Result Reviews
State Bank of India
For 2QFY2012, SBI’s standalone net profit increased by 12.4% yoy to `2,810cr,
in-line with our estimates. A strong sequential expansion in both domestic and
foreign NIM was the major positive from the result. However, fresh slippages of
`8,000cr and lower recoveries and upgrades during the quarter led to gross NPAs
shooting up by 22.2% qoq. Gross NPA ratio as of 2QFY2012 stood at 4.2% and
net NPA ratio stood at 2.0%. Provisioning coverage ratio declined considerably by
375bp to 63.5%. The bank made counter-cyclical provisions of `550cr in
2QFY2012 (`1,100 for 1HFY2012) to meet the stipulated 70% provision coverage
to gross NPA ratio as of September 30, 2010. Non-interest income declined by
14.4% yoy on account of lower treasury gains and dividend income (no interim
dividend received from subsidiaries). Fee income also came in lower by 11.7% yoy
mainly on account of bulk upfront fees received from some large corporate deals
last year and lower cross-sell income.
The stock is trading at 1.2x FY2013E ABV (adjusting for value of subsidiaries).
We recommend a Buy rating on the stock with a target price of `2,194.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
State Bank of India
For 2QFY2012, SBI’s standalone net profit increased by 12.4% yoy to `2,810cr,
in-line with our estimates. A strong sequential expansion in both domestic and
foreign NIM was the major positive from the result. However, fresh slippages of
`8,000cr and lower recoveries and upgrades during the quarter led to gross NPAs
shooting up by 22.2% qoq. Gross NPA ratio as of 2QFY2012 stood at 4.2% and
net NPA ratio stood at 2.0%. Provisioning coverage ratio declined considerably by
375bp to 63.5%. The bank made counter-cyclical provisions of `550cr in
2QFY2012 (`1,100 for 1HFY2012) to meet the stipulated 70% provision coverage
to gross NPA ratio as of September 30, 2010. Non-interest income declined by
14.4% yoy on account of lower treasury gains and dividend income (no interim
dividend received from subsidiaries). Fee income also came in lower by 11.7% yoy
mainly on account of bulk upfront fees received from some large corporate deals
last year and lower cross-sell income.
The stock is trading at 1.2x FY2013E ABV (adjusting for value of subsidiaries).
We recommend a Buy rating on the stock with a target price of `2,194.
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