SBI|Q2FY15 Result Update | Strong show on operating front, asset quality improved….. maintain buy with upwards revised target price of Rs 3230... :: IndiaNivesh

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SBI’s Q2FY15 results were lower than expectation on Net Interest income front
which came in at Rs 132.7 bn (up 9% yoy) as against our expectation of Rs 140 bn.
As expected operating expense was flat on yoy which led to higher operating
profit growth of 33% to Rs 84.2 bn (vs expectation of Rs 86.2 bn). Net profit was
ahead of expectation at Rs 31 bn, up 31% yoy led by lower tax rate. Fresh slippages
was lower at Rs 77 bn vs Rs 99.3 bn in Q1FY15 and Fresh restructuring was also
lower at Rs 34.5 bn vs Rs 36 bn. We are increasing our earnings estimates by 4% /
2% for FY15E / FY16E, Maintain buy with revised target price of Rs 3230, valuing
the bank on SOTP basis. Highlight it as top pick in large cap banking space.
Result highlights:
Large Corporate / International advance continues to drive loan book:
SBI’s loan book during Q2FY15 grew by 9% yoy to Rs 12426 bn led by strong growth
in Domestic Large corporate book and International advances (20% yoy). Domestic
advances growth was lower at 7% yoy (1% qoq) with strong growth coming from
Large corporate loan of 17% yoy to Rs 2330 bn. Mid corporate segment was down
2% yoy mainly due to conscious decision of not growing in this segment. Retail loan
growth was also lower at 11% yoy to Rs 2493 bn majorly driven by growth in home
loan segment of 14% yoy constituting 60% to total retail loan book as against 58%
in Q2FY14.
Loan book (Rs mn) % of total Q2FY15 Q2FY14 % YoY Q1FY15 % QoQ
Large Corporate 22.9 2330120 1987630 17.2 2262610 3.0
Mid Corporate 21.3 2158800 2197650 ‐1.8 2160870 ‐0.1
SME 16.5 1680110 1578960 6.4 1730100 ‐2.9
Retail 24.5 2492590 2241680 11.2 2424800 2.8
 Home 59.6 1485020 1300340 14.2 1442100 3.0
 Auto 11.6 288790 273960 5.4 282020 2.4
 Others 28.8 718780 667380 7.7 700680 2.6
Domestic 81.7 10153920 9501540 6.9 10085300 0.7
International 18.3 2272460 1891730 20.1 2237580 1.6
Total Loan book 100.0 12426380 11393260 9.1 12322880 0.8
Source: Company, IndiaNivesh Research
Domestic deposits growth remains healthy led by term deposits:
Deposits have registered a growth of 14% yoy to Rs 14373 bn with domestic deposits
growth of 15% yoy to Rs 13829 bn and International deposits growth was lower at
7% yoy. CASA deposits growth was lower at 12% yoy and CASA ratio was down by
71 bps qoq to 42.8%. Management specified decline in CASA ratio is led by shift of
CASA deposits to fixed deposits due to expectation of rate cut.

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