SBI Motilal 270513

7/28/2019 SBI Motilal 270513

1/16

Alpesh Mehta([email protected]) + 91 22 3982 5415

Sohail Halai([email protected])+ 91223982 5430

Investors are advised to refer through disclosures made at the end of the Research Report.

1

State Bank of IndiaCMP: INR2,176 TP: INR2,600 Buy

Financials & Valuation (INR b)

Y/E March 2013 2014E 2015E

NII 443 495 558

OP 311 333 384

NP 141 145 165

NIM (%) 3.3 3.2 3.1

EPS (INR)* 262 269 308

EPS Gr. (%) 14.6 2.7 14.4

BV(INR)* 1,786 2,006 2,256

ABV(INR)* 1,492 1,648 1,853

RoE (%) 15.9 14.2 14.5

RoA (%) 1.0 0.9 0.9

Div. Payout (%) 18.5 18.5 18.4

Valuations

P/E (x)* 7.9 7.7 6.8

P/BV (x)* 1.2 1.0 0.9

P/ABV (x)* 1.4 1.3 1.1

Div. Yield (%) 1.9 2.0 2.2

* Consolidated

BSE Sensex S&P CNX19,674 5,987

Bloomberg SBIN IN

Equity Shares (m) 684.0

M.Cap. (INR b)/(USD b) 1,488.6/26.852-Week Range (INR) 2,550/1,816

1,6,12 Rel.Perf.(%) -7/-2/-12

24 May 2013

4QFY13 Results Update | Sector: Financials

State Bank of India's (SBIN) 4QFY13 PAT declined 19% YoY to ~INR33b (9% below

estimate), led by weak core income and higher provisions. Key highlights:

NIM decline of 14bp QoQ to 3.2% v/s our expectation of stable NIM QoQ was

a disappointment. This led to NII being 4% below our estimate at INR110.8b.

Slippages declined QoQ to INR58.7b (v/s INR81.8b in 3QFY13 and our

expectation of INR72.8b), driven by upgradations and recoveries of INR57.2b

(in line with our expectations; partially led by upgrades of INR20b due to

restructuring). Net slippages were negligible at INR1.5b.

SBIN restructured loans of INR87.7b in 4QFY13. However, helped by lower

net slippages, overall net stress additions (change in standard restructured

loans + net slippages) were contained at INR85.3b v/s INR72.8b in 3Q.

Guidance for FY14: (1) Domestic NIM of ~3.7% (same as in FY13), (2) Loan

growth to be driven by higher refinancing opportunity, working capital

demand and retail financing, (3) Restructuring pipeline of ~INR103b.

Valuation and view: Pressure on NIM, lack of fee income opportunities and higher

credit cost have led to 6% downgrade in our operating profit estimate and ~13%

downgrade in our PAT estimate for FY14-15. While core operating performance is

likely to be under pressure, healthy trading gains would help maintain RoA of

~0.9% over FY14-15. Improvement in macroeconomic environment coupled with

(1) strong liability franchise, (2) lowest NSL of 5.2%, and (3) strong capitalization

could see retracement of valuation multiples. Buy.

7/28/2019 SBI Motilal 270513

2/16

State Bank of India

24 May 2013 2

Quarterly performance: Below estimates (INR m)

Y/E March 4QFY13A 4QFY13E Var. (%) Comments

Net Interest Income 110,784 115,123 -4 NIM down 14bp QoQ v/s expectation of flat NIM QoQ

% Change (YoY) -4 -1

Other Income 55,467 58,569 -5 Muted fees and lower trading gains

Net Income 166,251 173,692 -4Operating Expenses 88,645 90,981 -3

Operating Profit 77,606 82,711 -6 Core income below expectations


Other Provisions 41,810 27,481 52 Higher provisions on account of ageing of the potfolio and NPV

l o s s

Profit before Tax 35,797 55,230 -35

Tax Provisions 2,804 18,786 -85 Tax write-back

Net Profit 32,992 36,444 -9 While PBT was significantly below estimate lower tax rate helped


Source: Company, MOSL

Global NIM decline 14bp QoQ - a disappointmentDomestic NIM declined 15bp QoQ to 3.5%, whereas international NIM was stable at

1.4%. The compression in domestic NIM was led by FITL on restructured loans (awaiting

further details from mgmt) and higher share of loans to top rated corporate where

incremental spreads were lower. Higher other interest income of INR5.2b (+ve impact

of 5bp) and strong loan growth of 7% QoQ (+21% YoY, improvement of 320bp in CD

ratio), partially negated the impact.

Slippages decline QoQ - a positive surprise

Slippages declined QoQ to INR58.7b (v/s INR81.8b in 3QFY13 and expectation of

INR72.8b) - a positive surprise. And led by up-gradation and recoveries of INR57.2b(in-line with expectation; partially led by upgrades of INR20b due to restructuring)

net slippages were negligible at INR1.5b. Further, higher write-offs of INR24.2b brought

down GNPA (in absolute terms) by 4% QoQ. PCR (including technical write-off)

improved to 66.6% v/s 61.5% a quarter ago, partially driven by higher regulatory

requirement of NPA provisions due to shift in NPA buckets (~200bp increase in PCR).

Slippages in mid-corporate and SME segment declined QoQ

Performance of mid-corporate and SME improved QoQ as slippages stood at INR25.7b

(INR38.4b) and INR15.7b (INR21.1b). This coupled with higher upgrades and recoveries

of INR22.6b (INR6b) and INR17.8b (INR8.5b) led to sharp fall in net slippages. Retailsegment performance continued to improve as net slippages were at negative INR5b

v/s negative net slippages of INR1.3b in 3QFY13. Sector-wise higher slippages was

from iron and steel (INR6b), textiles (INR5.1b), trading (INR3.1b) and IT (INR3b).

Net slippages in mid-corporate and SME segment decline significantly

Net Slippages (INR b) Net Slippage Ratio (%)

FY12 FY13 FY12 FY13

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Corporate 10.4 21.2 33.2 2.1 32.1 16.4 37.8 5.2 1.8 3.6 5.2 0.3 4.7 2.4 5.2 0.7

International 0.5 1.6 5.3 -3.5 8.0 -1.6 -1.0 0.9 0.2 0.6 1.9 -1.3 2.9 -0.5 -0.3 0.3

SME 10.3 19.1 14.6 4.2 19.2 16.9 12.6 -2.0 4.1 7.2 5.3 1.4 6.2 5.3 3.7 -0.6Agri 8.2 15.9 7.8 1.7 10.0 5.5 5.8 2.4 4.3 9.2 3.6 0.7 4.2 2.3 2.3 0.9

Retai l 1.1 7.2 1.1 -7.9 6.3 2.9 -1.3 -5.0 0.3 1.9 0.3 -1.9 1.5 0.7 -0.3 -1.1

Overall 30.5 65.0 61.9 -3.4 75.6 40.2 53.8 1.5 1.8 3.7 3.3 -0.2 3.8 2.0 2.5 0.1

7/28/2019 SBI Motilal 270513

3/16

State Bank of India

24 May 2013 3

Restructuring disappoints; guidance of INR103b

In 4QFY13, bank restructured loan of INR87.7b (83b of loans), of which INR5.7b was

already classified as NPA. Of the incremental restructuring, three large accounts

formed INR34.9b. Consequently, standard restructured loan portfolio stood at

INR322.3b (3.1% of loans) and net stress loans as a percentage of overall loans was at5.2% as compared to 5% a quarter ago - one of the lowest in the industry. Net stress

additions (change in standard restructured loans + net slippages) for the quarter stood

at INR85.3b v/s INR72.8b in 3Q and quarterly average of INR85.9b in 1HFY13.

Of the standard restructured loan, highest contribution comes from power - INR53.7b

(16.7% of standard restructured loans; and 9.3% of funded exposure this segment)

largely led by restructuring of two large accounts during the quarter. This is followed

by iron and steel INR52.6b (16.3% of standard restructured loan; and 8.2% of funded

exposure in this segment), and textile segment INR27.9b (8.7% of standard

restructured loan and 6.1% of funded exposure in this segment). Restructuringpipeline is at INR58b (large corporate - INR30b and mid-corporate of INR28b), which

excludes restructuring of SEB (TNSEB of INR35b (NPV loss of INR560m) - already

restructured in 1QFY14 and UP SEB of INR9.8b).

Net stress loans lowest among peers

1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 QoQ (%) YoY (%)

Asset quality (INR b)

GNPA 277.7 339.5 401.0 396.8 471.9 492.0 534.6 511.9 -4.2 29.0

NNPA 124.4 161.2 188.0 158.2 203.2 226.1 253.7 219.6 -13.5 38.8

GNPA (%) 3.52 4.19 4.61 4.44 4.99 5.15 5.30 4.75 -55bps 31bpsNNPA (%) 1.61 2.04 2.22 1.82 2.22 2.44 2.59 2.10 -49bps 28bps

PCR (Cal,%) 55.2 52.5 53.1 60.1 56.9 54.0 52.5 57.1 457bps -302bps

PCR (Rep, %) 67.3 63.5 62.5 68.1 64.3 62.8 61.5 66.6 509bps -152bps

Other details

Sl ippages 61.2 82.7 81.6 43.8 108.4 71.1 81.8 58.7 -28.2 33.9

Upg & Recoveries 30.8 17.7 19.7 47.2 32.8 30.9 28.0 57.2 104.4 21.1

Net slippages 30.5 65.0 61.9 -3.4 75.6 40.2 53.8 1.5 -97.2 -144.4

Restructured loans

OSLR (as restated) 138.9 162.0 141.2 163.4 163.8 219.4 238.5 322.3 35.2 97.2

Addition in the quarter 23.1 -20.8 22.2 0.4 55.7 19.0 83.8 341.0 276.9

OSRL (%) 1.80 2.05 1.67 1.88 1.79 2.37 2.44 3.08 64bps 120bps

NSL (NNPA+OSRL)

Net stress loans 263.3 323.2 329.2 321.6 367.0 445.6 492.2 541.8 10.1 68.5

NSL (%) 3.41 4.09 3.89 3.70 4.01 4.81 5.03 5.18 15bps 148bps

NSL/NW (%, Post tax) 27.7 32.0 30.6 26.8 29.3 33.9 35.8 38.4

(NNPA+25% OSRL)/NW (%, Post tax) 24.0 28.0 27.3 23.4 26.0 29.7 31.4 32.7

Net slippages+ Add to RL 88.1 41.1 18.9 76.0 95.8 72.8 85.3 17.2 352.4

Net stress addition (Post Prov) 59.9 6.0 -7.6 45.4 78.6 46.6 49.7 6.7 -753.6

OSLR: Outstanding Restructrued loans, NSL (net stress loans), All figures in INR b unless otherwise stated

7/28/2019 SBI Motilal 270513

4/16

State Bank of India

24 May 2013 4

Strong loan growth driven by corporate segment

Domestic loan portfolio increased 9% QoQ and 20% YoY to INR9.1t, whereas

international loan portfolio was flat QoQ (+24.6% YoY) at INR1.7t. Within domestic

loan portfolio growth remained strong in large corporate segment at 12% QoQ and

40% YoY(now forms 16% of overall loans v/s 14% in FY12 and share of incrementalloans in FY13 was at 33.4%). Growth resumed in mid-corporate segment as well (+14%

QoQ and 17% YoY). Sector-wise growth was strong in infrastructure (+29.6% YoY and

9% QoQ) driven by 46% YoY increase in power segment. Management mentioned that

the large part of the growth is attributed to top rated corporate in this segment with

higher exposure towards generation segment. Other areas of strong growth were

iron and steel +13% QoQ and 33% YoY and textiles (+19% YoY).

Qualitatively management also mentioned that of the incremental exposure in mid-

corporate, 85% is investment grade and 69% to corporate with A and above rating. Of

the overall exposure in mid-corporate segment A and above rated exposure forms34% with loans rated in between A and BBB category at 26%. Further in large corporate

segment A and above rated exposures form 69% and those in between BBB and A

forms 19%.

Other highlights

SA deposit was flat QoQ (+15% YoY) and helped by strong growth of 38% QoQ

(partially seasonal in nature; +12.5%YoY) in CA Deposits, overall CASA grew 7%

QoQ and 14.7% YoY. CASA ratio improved to 46.5% (+100bp QoQ),

During the quarter bank provided INR7.1b for wage revision (factored 15% wage

hike).The impact was partially negated by higher dividend income of INR6.4b (nilin 3QFY13)

Fee income declined YoY across the streams, with an exception of commission on

bank guarantees (+9% YoY; formed 11% of CEB), and transaction fees (+20% YoY;

formed 14% of CEB). Fees from loan processing declined 8% YoY to INR9.2b (24%

of CEB), however improved 20% QoQ.

CAR remained healthy at 12.9%, with Tier I at 9.5%

Banking subsidiaries: Weak performance

SBI's subsidiary banks reported 4QFY13 PAT decline of 28% YoY (down 8% QoQ) to

INR9.2b. The performance remained weak across the spectrum of associate banks

with an exception for State Bank of Travancore (PPP: +12% YoY and 19% QoQ; and PAT:

+9% YoY and 26% QoQ). NII growth was flat QoQ and YoY at INR32b. And while non-

interest income growth was healthy at 10% YoY (+60% QoQ), led by 25% YoY increase

in employee expense, PPP declined 11% YoY (+3% QoQ). Provisioning expense was

higher by 65% YoY (+45% QoQ), translating into PBT decline of 40% YoY (20% QoQ).

Lower tax rate of 16.7% v/s 30.4% in 4QFY13 however, helped profitability.

GNPA increased 5% QoQ and NNPA was up 7% QoQ. In % terms GNPA and NNPA was at

3.4% (v/s 3.5% in 3QFY13) and 1.8% (flat QoQ). PCR (calculated) was at 47% as compared

to 47.9% a quarter ago. Divergent trend was seen in asset quality performance with

SBP and SBT reporting a drop of 10% QoQ in GNPA (in absolute terms) whereas SBBJ

saw a rise of 20%+ QoQ. Loan growth was strong at 7% QoQ (+17% YoY).

7/28/2019 SBI Motilal 270513

5/16

State Bank of India

24 May 2013 5

Net interest income (INR m)

4QFY13 3QFY13 QoQ 4QFY12 YoY

Gr % Gr %

SB of Travancore 5,698 5,172 10.2 5,128 11.1

SB of Hydrabad 10,032 9,761 2.8 10,526 -4.7

SB of Mysore 4,676 4,613 1.4 3,917 19.4

SB of Patiala 5,988 6,400 -6.4 6,137 -2.4

SBBJ 5,573 6,729 -17.2 6,215 -10.3

Total 31,966 32,675 -2.2 31,923 0.1

Operating profit (INR m)


Gr % Gr %

SB of Travancore 3,854 3,242 18.9 3,442 12.0

SB of Hydrabad 7,147 7,423 -3.7 9,467 -24.5

SB of Mysore 3,538 3,052 15.9 2,627 34.7

SB of Patiala 4,392 3,840 14.4 4,992 -12.0

SBBJ 3,739 4,518 -17.2 4,814 -22.3

Total 22,669 22,074 2.7 25,342 -10.5

Profit after tax (INR m)


Gr % Gr %

SB of Travancore 1,660 1,320 26 1,530 8

SB of Hydrabad 3,799 3,217 18 4,810 -21

SB of Mysore 762 1,547 -51 1,162 -34

SB of Patiala 1,236 1,815 -32 2,766 -55

SBBJ 1,782 2,151 -17 2,479 -28

Total 9,239 10,050 -8.1 12,747 -27.5

GNPA ratio (%)

4QFY13 3QFY13 CHG 4QFY12 CHG

(BPS) (BPS)

SB of Travancore 2.56 3.04 -48 2.66 -10

SB of Hydrabad 3.46 3.38 8 2.56 90

SB of Mysore 4.53 3.99 54 3.70 83

SB of Patiala 3.25 3.91 -66 2.94 31

SBBJ 3.62 3.13 49 3.30 32

Total 3.40 3.47 -6 2.95 45

7/28/2019 SBI Motilal 270513

6/16

State Bank of India

24 May 2013 6

Valuation and view

Pressure on margins (core NIM down 20bp vs reported 50bp in FY13), and lack of fee

income opportunities is leading to weak operating performance. This coupled with

higher credit cost has led to downgrade in operating profit and PAT estimates by 6%

and ~13% for FY14-15. Fresh restructuring during the quarter came in as a negativesurprise, however helped by insignificant net slippages and improvement in PCR,

overall rise in net stress loans was contained. Restructuring pipeline of INR103b

(including SEB restructuring of INR45b) is a concern. For FY14 we factor net slippages

of 1.5% and credit cost of 1% as compared to 2% and 1.2% in FY13.

SBIN has consistently delivered RoA's of 0.9-1%, in different phases of economic

cycles. While we expect core operating performance to be under pressure (due to

NIM pressure, weak fee income growth and lack of operating leverage opportunities

in the near term), healthy trading gains would translate into RoA's of ~0.9% over

FY14/15, despite factoring higher credit cost. RoEs are expected to be lower at 14-15%

over FY14-15.

Improvement in macro-economic environment coupled with 1) strong liability

franchise, (2) lowest NSL and (3) strong capitalization could see retracement of

valuation multiples. The stock trades at 1x/0.9x FY14/15 Consol BV of INR2,006/INR2,256

and 7.7x/6.8x FY14/15 consol EPS of INR269/INR308. Maintain Buy with a target price of

INR2,600 (1.1x FY15 con BV+INR115 for Ins).

Key risk: (1) change in top management at end of Sep-13 (2) further increase in stress

in mid-corporate and SME segment which has been a trouble area for the bank.

We downgrade our estimate to factor weak core operations and higher credit cost (INR b)

Old Revised Change (%)

FY14 FY15 FY14 FY15 FY14 FY15

Net Interest Income 516 580 495 558 -4.1 -3.8

Other Income 182 203 175 196 -3.8 -3.2

Total Income 698 783 670 754 -4.0 -3.7

Operating Expenses 343 379 338 370 -1.5 -2.2

Operating Profits 356 404 333 384 -6.5 -5.0

Provisions 98 108 113 133 15.5 23.0

PBT 258 296 219 250 -14.9 -15.3Tax 92 105 75 85 -18.5 -18.8

PAT 166 191 145 165 -12.9 -13.3

Margins (%) 3.3 3.3 3.2 3.1

Credit Cost (%) 0.9 0.9 1.0 1.0

RoA (%) 1.0 1.0 0.9 0.9

RoE (%) 16.3 16.5 14.2 14.5

Source: MOSL

7/28/2019 SBI Motilal 270513

7/16

State Bank of India

24 May 2013 7

Core operations weakens led by lower NIMs and lack of fee income opportunities (%)

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E

Net Interest Income 3.2 3.3 2.8 2.6 2.5 2.3 2.9 3.4 3.1 2.9 2.9

Fee income 0.8 0.9 0.9 0.9 0.9 1.0 1.0 0.9 0.8 0.7 0.7

Fee/Net Income Ratio 17.0 19.1 22.2 23.2 22.7 25.1 24.1 21.0 19.0 18.1 17.7

Core Operating Income 4.0 4.2 3.8 3.6 3.4 3.3 3.9 4.3 3.8 3.7 3.6

Operating Expenses 2.3 2.5 2.2 2.0 1.9 2.0 2.0 2.0 2.0 2.0 1.9

Cost/core Income ratio 57.5 58.5 59.4 54.9 54.9 60.9 52.1 47.1 52.5 54.8 53.6

Employee cost 1.6 1.7 1.5 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.2

Other operating expenses 0.7 0.8 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.7 0.7

Core Operating Profits 1.7 1.7 1.5 1.6 1.5 1.3 1.9 2.3 1.8 1.7 1.6

Non Interest Income (ex fees) 0.8 0.6 0.4 0.4 0.6 0.5 0.4 0.2 0.3 0.3 0.3

Operating Profits 2.5 2.4 1.9 2.0 2.1 1.8 2.2 2.5 2.1 2.0 2.0

Provisions 1.0 0.9 0.4 0.4 0.4 0.4 0.9 1.0 0.8 0.7 0.7

NPA provisions 0.3 0.0 0.3 0.3 0.3 0.5 0.7 0.9 0.8 0.7 0.7

Other Provisions 0.8 0.9 0.2 0.1 0.1 0.0 0.2 0.1 0.0 0.0 0.0

PBT 1.5 1.4 1.4 1.6 1.7 1.4 1.3 1.4 1.4 1.3 1.3Tax 0.5 0.5 0.6 0.6 0.6 0.5 0.6 0.5 0.4 0.4 0.4

Tax Rate % 34.0 36.2 40.4 35.5 35.7 34.2 44.7 36.7 29.3 34.0 34.0

RoA 0.99 0.92 0.86 1.04 1.08 0.91 0.73 0.91 0.97 0.86 0.9

Leverage 19.6 18.4 18.0 16.0 15.8 16.4 17.6 17.5 16.3 16.5 17.1

RoE 19.4 17.0 15.4 16.8 17.1 14.9 12.7 16.0 15.9 14.2 14.5

Source: Company, MOSL

State Bank: One year forward P/E State Bank: One year forward P/BV

7/28/2019 SBI Motilal 270513

8/16

State Bank of India

24 May 2013 8

Quarterly trends

Restructuring was high during the quarter a negative surprise

Led by increase in PCR NNPA declines further

In 4QFY13, bank restructured loan of INR87.7b (83b of loans).

Of the incremental restructuring, three large accounts

formed INR34.9b.

PCR (including technical write-off) improved to 66.6% v/s

61.5% a quarter ago partially driven by higher regulatory

requirement of NPA provisions due to shift in NPA buckets.

Slippages lower than expected

Performance of mid-corporate and SME (stress areas for

the bank) improved QoQ as slippages declined to INR25.7b(INR38.4b) and INR15.7b (INR21.1b).

GNPA performance better than expectation (%)

GNPA decline across segments (%)

Sharp drop in net slippages across segment coupled with

higher write-offs and healthy growth brought down GNPAs

Up-gradation and recovery in-line with expectation

The up-grades and recoveries of INR57.2b was partially

driven by upgrades of INR20b due to restructuring of fewaccounts, hence net slippages were negligible at INR1.5b.

Negligible net slippages of INR1.5b coupled with higher

write-offs of INR24.2b brought down GNPA (in absolute

terms) by 4% QoQ.

7/28/2019 SBI Motilal 270513

9/16

State Bank of India

24 May 2013 9

Quarterly trends (Contd.)

Domestic CD ratio improves further (%)

Margin stabilizes QoQ (%)

Cost to core income stable despite weak core operations (%)

Benefit of recent capital infusion and availing of

refinancing window has led to increase in CD ratio

SA deposit was flat QoQ (+15% YoY) and helped by strong

growth of 38% QoQ (partially seasonal in nature; +12.5%YoY)

in CA Deposits, overall CASA grew 7% QoQ and 14.7% YoY.

Weak core income coupled with higher wage related

provisions led to increase in cost to core income.

Loan growth picks-up QoQ

Within domestic loan portfolio growth remained strong

in large corporate segment at 12% QoQ and 40% YoY (share

of incremental loans in FY13 was at 33.4%).

Fee income performance remains dismal

Fee income declined YoY across the streams with

exception of commission on bank guarantees (+9% YoY),

and transaction fees (+20% YoY).

CASA ratio stable QoQ(%)

The compression in NIMs was led by FITL on restructured

loans (awaiting further details from mgmt) and higher

share of loans to top rated corporate.

7/28/2019 SBI Motilal 270513

10/16

State Bank of India

24 May 2013 10

Quarterly Snapshot (INR m)

FY12 FY13 Var. (%) Cumulative Numbers

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q QoQ YoY FY12 FY13 YoY

Gr (%)

Profit and Loss

Net Interest Income 96,995 104,817 115,188 115,911 111,246 109,738 111,545 110,784 -1 -4 432,911 443,313 2Other Income 35,342 33,674 20,730 53,768 34,931 33,466 36,485 55,467 52 3 143,514 160,349 12

Trading profits 1,689 281 -10,904 -263 2,210 2,302 4,178 2,292 -45 -970 -9,197 10,981 -219

Fee Income 26,329 26,003 26,415 42,161 26,027 24,492 25,587 38,732 51 -8 120,909 114,837 -5

Forex Income 3,312 4,806 2,855 3,348 4,566 3,198 4,401 4,751 8 42 14,322 16,916 18

Others 4,012 2,584 2,363 8,521 2,127 3,475 2,319 9,692 318 14 17,481 17,614 1

Total Income 132,338 138,492 135,918 169,678 146,177 143,205 148,030 166,251 12 -2 576,426 603,662 5

Operating Expenses 59,913 63,749 63,318 73,710 64,410 69,668 70,122 88,645 26 20 260,690 292,844 12

Employee 39,171 41,447 41,633 47,490 41,371 42,802 43,512 56,124 29 18 169,740 183,809 8

Others 20,742 22,302 21,685 26,220 23,039 26,866 26,610 32,521 22 24 90,950 109,035 20

Operating Profits 72,424 74,743 72,600 95,968 81,767 73,536 77,908 77,606 0 -19 315,736 310,817 -2

Provisions 41,569 33,855 24,074 31,404 24,563 18,256 26,679 41,810 57 33 130,902 111,308 -15

PBT 30,855 40,888 48,526 64,564 57,204 55,280 51,228 35,797 -30 -45 184,833 199,509 8

Taxes 15,020 12,784 15,895 24,061 19,688 18,699 17,268 2,804 -84 -88 67,760 58,459 -14

PAT 15,835 28,104 32,630 40,503 37,516 36,581 33,961 32,992 -3 -19 117,073 141,050 20

Asset Quality (INR b)

GNPA 278 339 401 397 472 492 535 512 -4 29

NNPA 124 161 188 158 203 226 254 220 -13 39

GNPA (%) 3.5 4.2 4.6 4.4 5.0 5.2 5.3 4.8 -55 31

NNPA (%) 1.6 2.0 2.2 1.8 2.2 2.4 2.6 2.1 -49 28

PCR (Calculated, %) 55 53 53 60 57 54 53 57 457 -302

PCR (Reported, %) 67 64 63 68 64 63 61 67 509 -152

Sl ippages 61 83 82 44 108 71 82 59 -28 34

Slippage Ratio (%) 3.7 4.9 4.5 2.3 5.6 3.6 3.9 2.6 -124 31Prov. for NPA in qtr 28 29 30 28 28 18 28 40 44 40

Credit Cost (%) 1.5 1.5 1.5 1.3 1.3 0.8 1.2 1.6 41 25

Ratios (%)

Fees to Total Income 19.9 18.8 19.4 24.8 17.8 17.1 17.3 23.3 21.0 19.0

Cost to Core Income 45.9 46.1 43.1 43.4 44.7 49.4 48.7 54.1 47.1 52.5

Tax Rate 48.7 31.3 32.8 37.3 34.4 33.8 33.7 7.8 36.7 29.3

Loan/Deposit 81.1 81.2 84.5 83.1 83.1 81.8 84.6 86.9

Domestic Loan/Deposit 76.7 75.8 78.6 78.5 77.8 76.6 79.2 82.4

CAR 11.6 11.4 11.6 13.8 13.2 12.6 12.2 12.9

Tier I 7.6 7.5 7.6 9.8 9.4 9.0 8.7 9.5

RoA (cal) 0.5 0.9 1.0 1.2 1.1 1.0 0.9 0.9

RoE (Cal) 9.6 16.4 17.9 20.3 17.5 16.3 14.4 13.5

Margins (%)

Yield on Advances 10.4 10.8 10.9 11.1 10.9 10.9 10.8 10.5

Yield On Funds 7.2 7.3 7.5 7.5 7.5 7.5 7.5 7.5

Cost of Deposits 5.7 5.8 5.9 6.0 6.2 6.3 6.3 6.3

Quarterly margins 3.6 3.8 4.1 3.9 3.6 3.3 3.3 3.2

NIM Cumulative 3.6 3.7 3.8 3.9 3.6 3.5 3.4 3.3

For %age change QoQ and YoY is bp Source: Company, MOSL

7/28/2019 SBI Motilal 270513

11/16

State Bank of India

24 May 2013 11

Quarterly Snapshot

FY11 FY12 FY13 Variation (%)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q QoQ YoY

Balance Sheet (INR b)

Capital 6 6 6 6 6 6 6 7 7 7 7 7 2 2

Reserves & Surplus 682 716 744 644 659 700 747 833 870 913 956 982 3 18Net Worth 689 722 750 650 666 706 753 840 877 920 963 989 3 18

Deposits 8,153 8,553 8,790 9,339 9,501 9,732 10,010 10,436 11,029 11,336 11,567 12,027 4 15

Domestic 7,624 8,078 8,334 8,872 8,999 9,173 9,414 9,822 10,271 10,594 10,782 11,301 5 15

Overseas 529 476 456 468 502 559 595 614 758 743 785 726 -7 18

Borrowings 1,072 1,126 1,161 1,196 1,214 1,158 1,242 1,270 1,349 1,428 1,484 1,692 14 33

Other Liabilities & Prov. 837 643 813 1,052 1,095 829 1,010 809 762 716 674 955 42 18

Total Liabilities 10,750 11,045 11,514 12,237 12,475 12,425 13,014 13,355 14,018 14,401 14,687 15,663 7 17

Assets

Cash/RBI 467 671 807 944 916 750 719 541 734 661 517 658 27 22

Short term funds 333 348 316 285 340 185 212 431 351 272 293 490 67 14

Investments 3,000 2,855 2,700 2,956 3,014 3,015 3,016 3,017 3,017 3,018 3,019 3,019 0 0

Loans 6,532 6,807 7,266 7,567 7,709 7,906 8,463 8,676 9,168 9,269 9,781 10,456 7 21

Domestic 5,587 5,877 6,294 6,624 6,774 6,852 7,353 7,579 7,815 7,979 8,370 9,095 9 20

Overseas 946 930 972 943 935 1,054 1,109 1,097 1,353 1,290 1,412 1,361 -4 24

Net Fixed Assets 45 48 48 48 49 51 52 55 59 64 67 70 5 28

Other Assets 373 315 376 438 447 395 483 531 475 419 430 479 12 -10

Total Assets 10,750 11,045 11,514 12,237 12,475 12,425 13,014 13,355 14,018 14,401 14,687 15,663 7 17

Deposit Break-up

CASA Deposits 3,624 3,830 3,994 4,305 4,304 4,350 4,474 4,581 4,739 4,762 4,910 5,255 7 15

Savings Deposits 2,840 3,039 3,190 3,234 3,444 3,524 3,679 3,598 3,904 3,965 4,109 4,149 1 15

% of Total Deposits 35 36 36 35 36 36 37 34 35 35 36 34 -103 2

Current Deposits 784 791 804 1,071 860 826 795 983 835 797 801 1,106 38 13

% of Total Deposits 10 9 9 11 9 8 8 9 8 7 7 9 227 -22

CASA (Cal) 44 45 45 46 45 45 45 44 43 42 42 44 44 -224

CASA Reported 48 47 49 49 48 47 48 47 46 45 46 47 96 -14

Domestic Loan Break Up

Large Corporate 956 943 1,058 1,087 1,141 1,147 1,246 1,250 1,415 1,458 1,567 1,756 12 40

Mid Corporate 1,312 1,411 1,486 1,576 1,578 1,578 1,640 1,708 1,678 1,704 1,750 1,999 14 17

SME 993 1,053 1,094 1,197 1,232 1,278 1,347 1,457 1,343 1,447 1,586 1,730 9 19

Agriculture 760 695 870 948 955 958 1,019 1,073 1,201 1,151 1,154 1,248 8 16

Retai l 1,403 1,495 1,567 1,646 1,651 1,688 1,753 1,824 1,863 1,918 1,998 2,097 5 15

Others 163 280 219 171 217 204 349 267 315 286 314 264 -16 -1

Domestic Loan Mix (%)

Large Corporate 17 16 17 16 17 17 17 16 18 18 19 19Mid Corporate 23 24 24 24 23 23 22 23 21 21 21 22

SME 18 18 17 18 18 19 18 19 17 18 19 19

Agriculture 14 12 14 14 14 14 14 14 15 14 14 14

Retai l 25 25 25 25 24 25 24 24 24 24 24 23

Others 3 5 3 3 3 3 5 4 4 4 4 3

* There has been reclassification of loan in 4QFY11 Source: Company, MOSL

7/28/2019 SBI Motilal 270513

12/16

State Bank of India

24 May 2013 12

EPS: MOSL forecast v/s consensus (Standalone, INR)

MOSL Consensus Variation

Forecast Forecast (%)

FY14 211.7 234.9 -9.9

FY15 241.7 267.8 -9.7

Shareholding pattern (%)

Mar-13 Dec-12 Mar-12

Promoter 62.3 61.6 61.6

Domestic Inst 16.0 17.2 17.1

Foreign 13.3 12.3 11.4

Others 8.4 8.9 9.9

1-year Sensex rebased

Stock Info

7/28/2019 SBI Motilal 270513

13/16

State Bank of India

24 May 2013 13

Financials and Valuation

7/28/2019 SBI Motilal 270513

14/16

State Bank of India

24 May 2013 14

Financials and Valuation

7/28/2019 SBI Motilal 270513

15/16

State Bank of India

24 May 2013 15

N O T E S

7/28/2019 SBI Motilal 270513

16/16

Motilal Oswal Securities LtdMotilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E-mail: [email protected]

DisclosuresThis report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement

to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been

furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates

or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt

or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

The information contained herein is based on publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, MOSt and/or its

affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or

employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report . MOSt or any of its affiliatesor employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness

for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision

based on this report or for any necessary explanation of its contents.

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest

Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Disclosure of Interest Statement State Bank of India

1. Analyst ownership of the stock No

2. Group/Directors ownership of the stock Yes

3. Broking relationship with company covered Yes

4. Investment Banking relationship with company covered No

Analyst Certif icat ionThe views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or

will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible

for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

Regional Disclos ures (outside India)This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to

law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.K.This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial

Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to

which this document relates is only available to investment professionals and will be engaged in only with such persons.

For U.S.Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States.

In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state

laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein

are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional

investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major

institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended

(the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into

a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within

the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,

MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst

account.

For SingaporeMotilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors

Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore

to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.

In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Nihar Oza Kadambari Balachandran

Email: [email protected] Email : [email protected]

Contact: (+65) 68189232 Contact: (+65) 68189233 / 65249115

Office address: 21 (Suite 31), 16 Collyer Quay, Singapore 049318

SBI Motilal 270513

Documents

Transcript of SBI Motilal 270513