SBI Beats 1QFY2011 Estimates on Strong NII, Lower Costs

1QFY2011 Result Update | Banking
August 12, 2010

State Bank of India ACCUMULATE
CMP Rs2,784
Performance Highlights Target Price Rs3,185

Investment Period 12 Months

Particulars (Rs cr) 1QFY11 4QFY10 % chg (qoq) 1QFY10 % chg (yoy)
NII 7,304 6,721 8.7 5,025 45.4
Stock Info
Pre-Prov Profit 6,134 5,194 18.1 3,674 67.0
Sector Banking
PAT 2,914 1,867 56.1 2,330 25.1
Market Cap (Rs cr) 1,76,751
Source: Company, Angel Research
Beta 1.2
For 1QFY2011, State Bank of India’s (SBI) standalone net profit grew 25.1% yoy
52 Week High / Low 2,798/1,670
and 56.1% qoq, which exceeded our estimates on account of better-than-
Avg. Daily Volume 4,84,717
estimated NII and lower operating expenses. Robust operating performance with
reasonable asset quality was the key highlight of the result. We maintain an Face Value (Rs) 10
Accumulate rating on the stock. BSE Sensex 18,074
Nifty 5,416
Robust operating performance: The bank’s net advances increased 20.4% yoy
and 3.4% qoq to Rs6,53,220cr, while total deposits grew 6.8% yoy and 1.4% qoq Reuters Code SBI.BO
to Rs8,15,297cr during 1QFY2011. Reported net interest margin (NIM) improved Bloomberg Code SBIN@IN
by 22bp qoq and 88bp yoy to 3.18% during the quarter despite a hit of 12bp due
to change in the method of calculation of SA interest. The margin expansion was
underpinned by improvement in the CASA ratio to 47.5% as of 1QFY2011 from Shareholding Pattern (%)
38.5% as of 1QFY2010 and from 46.7% as of 4QFY2010 coupled with shedding Promoters 59.4
of high-cost bulk deposits. Gross NPAs were up by 6.6% qoq and net NPAs MF / Banks / Indian Fls 19.9
increased 1.9% qoq to Rs20,825cr and Rs11,074cr, respectively. NPA provision FII / NRIs / OCBs 14.8
coverage ratio including technical write-offs improved to 60.7% compared to
Indian Public / Others 5.9
59.2% as of 4QFY2010.

Outlook and Valuation: Due to strong CASA and fee income, SBI’s core RoEs
have improved over the past few years and unlike virtually all other PSBs, actual Abs. (%) 3m 1yr 3yr
FY2010 RoEs are below core levels due to low asset yields, providing scope for Sensex 5.1 20.3 21.6
upside as the CD ratio improves and yields normalise to sectoral averages. SBI is
SBI 19.8 63.5 83.6
trading at 2.1x FY2012E ABV while excluding value of insurance and capital
market subsidiaries, it is trading at 1.7x FY2012E ABV v/s its 5-year range of
1.3-2.0x and median of 1.7x. We believe this provides reasonable upside,
especially in light of its dominant position and reach, strong growth and superior
earnings quality. We maintain an Accumulate on the stock, with a Target Price of
Rs3,185.

Key Financials
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
NII 20,873 23,671 30,834 37,558 Vaibhav Agrawal
% chg 22.6 13.4 30.3 21.8 022 – 4040 3800 Ext: 333
Net Profit 9,332 9,398 10,771 15,042 vaibhav.agrawal@angeltrade.com

% chg 38.7 0.7 14.6 39.6
Amit Rane
NIM (%) 2.6 2.5 2.8 2.9
022 – 4040 3800 Ext: 326
EPS (Rs) 147.0 148.0 169.7 236.9 amitn.rane@angeltrade.com
P/E (x) 18.9 18.8 16.4 11.8
P/ABV (x) 3.4 2.9 2.4 2.1 Shrinivas Bhutda
RoA (%) 1.1 0.9 0.9 1.1 022 – 4040 3800 Ext: 316
RoE (%) 18.7 16.2 16.4 20.1 shrinivas.bhutda@angeltrade.com

Please refer to important disclosures at the end of this report 1

State Bank of India | 1QFY2011 Result Update

Exhibit 1: 1QFY2011 performance
Particulars (Rs cr) 1QFY11 4QFY10 % chg (qoq) 1QFY10 % chg (yoy)
Interest earned 18,452 17,966 2.7 17,473 5.6
Interest expenses 11,148 11,244 (0.9) 12,448 (10.4)
Net interest income 7,304 6,721 8.7 5,025 45.4
Non-interest income 3,690 4,509 (18.2) 3,569 3.4
Total income 10,994 11,230 (2.1) 8,594 27.9
Operating expenses 4,859 6,036 (19.5) 4,920 (1.2)
Pre-prov. profit 6,134 5,194 18.1 3,674 67.0
Provisions & cont. 1,551 2,349 (34.0) 173 798.1
PBT 4,583 2,844 61.1 3,501 30.9
Prov. for taxes 1,669 978 70.7 1,171 42.5
PAT 2,914 1,867 56.1 2,330 25.1
EPS (Rs) 45.9 29.4 56.1 36.7 25.1
Cost-to-income ratio (%) 44.2 53.7 57.2
Effective tax rate (%) 36.4 34.4 33.4
Net NPA (%) 1.7 1.7 1.6

Exhibit 2: 1QFY2011 Actual vs. Estimates
Particulars (Rs cr) Actual Estimates Var (%)
Net interest income 7,304 6,404 14.0
Non-interest income 3,690 3,848 (4.1)
Total income 10,994 10,252 7.2
Operating expenses 4,859 5,374 (9.6)
Pre-prov. profit 6,134 4,878 25.8
Provisions & cont. 1,551 1,372 13.1
PBT 4,583 3,506 30.7
Prov. for taxes 1,669 1,192 40.0
PAT 2,914 2,314 26.0

August 12, 2010 2


Advances grow in line with industry, deposits growth lags

During the quarter, net advances of the bank increased 20.4% yoy and 3.4% qoq
to Rs6,53,220cr, underpinned by strong growth in large corporate advances of
34.7% yoy and growth in home loans of 29.8% yoy. Loan book of the bank
continues to be well diversified with no segment accounting for more than 21% of
the total loan book. The growth in advances was driven by the telecom related
lending (Rs7,000cr) and upturn in textiles, iron and steel, auto, infrastructure and
gems & jewellery industry. Going forward, the credit demand from the large and
mid corporate segments is expected to be strong, with sanctions in pipeline of
Rs14,798cr and Rs7,791cr, respectively.

Exhibit 3: Segment-wise advances yoy growth rates
Segment %
Large Corporate 34.7
Mid-Corporate 14.3
SME 14.7
Agricultural 16.0
International 22.1
Home 29.8
Auto 48.1
Education 30.8
Overall Advances 20.4

Deposits of the bank went up from Rs7,63,563cr in 1QFY2010 to Rs8,15,297cr in
1QFY2011 recording a yoy growth of 6.8%, driven by CASA growth of 28.9% and
retail term deposits growth of 10.2%, despite shedding of high-cost bulk deposits
by 51.4%. Current deposits increased 12.5% yoy, while savings deposits rose
33.9% yoy. Savings bank deposits grew at an average of Rs9,232cr per month
during the quarter to Rs71,806cr as of 1QFY2011 leading to an improvement in
CASA ratio from 38.5% as of 1QFY2010 to 47.5% as of 1QFY2011 (46.7% in
4QFY2010). As a result, NII increased by 45.4% yoy and 8.7% qoq to Rs7,304cr
in 1QFY2011.

Exhibit 4: Business growth trend
Advances YoY Growth Deposits YoY Growth Credit-Deposit Ratio (RHS)
(%) (%)

40.0 84

80
30.0

76
20.0
72

10.0
68

- 64
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11


August 12, 2010 3


Exhibit 5: Well-diversified loan book - 1QFY2011

Others International
3% 16%
Retail
21%

Mid-Corporate
Agricultural 20%
9%

Large
Corporate
SME
14%
17%


NIM continues its ride on growth path

The bank’s reported NIM has been in an upward trend since hitting a low of
2.30% in 1QFY2010 from which it has improved by 88bp to 3.18% in 1QFY2011.
Even on a sequential basis, NIM has expanded by 22bp despite the 12bp hit due
to the switch in calculation method of savings deposits interest. The improvement
in NIMs was driven by increase in the CD ratio to 80.1% (from 78.6% in
4QFY2010), shedding of bulk deposits and increase in CASA ratio.

Exhibit 6: Trend in spreads and NIMs

(%) Yield on Advances Cost of Deposits Reported NIM

12.00 10.01 10.24 10.42 10.15 10.01 9.95 9.79 9.66 9.30
9.00
6.16 5.94 5.95 6.30 6.16 6.06 5.92 5.80 5.27
6.00
3.03 3.16 3.10 2.82 2.96 3.18
2.39 2.30 2.55
3.00

0.00
1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11


Reasonable asset quality

SBI’s asset quality suffered slightly during the quarter as gross NPAs rose 6.6% qoq
to Rs20,825cr, while net NPAs increased 1.9% qoq to Rs11,074cr partly due to the
net increase in gross NPAs from agricultural advances of Rs683cr, which included
Rs354cr towards the Agri Debt Waiver scheme. The gross and net NPA ratio
remained steady sequentially at 3.1% and 1.7%, respectively.

The gross slippages during the quarter were Rs4,081cr, which came primarily from
the agri, retail and SME portfolios. The annualised slippage ratio stood at 2.6%
compared to 2.2% in FY2010. The bank’s corporate and SME portfolio accounted
for more than 56.0% of the total gross NPAs of Rs20,825cr. The provision

August 12, 2010 4


coverage ratio including technical write-offs improved from 59.2% as of
4QFY2010 to 60.7% as of 1QFY2011.

Out of the cumulative standard restructured assets under the RBI Special
Dispensation Scheme which stood at Rs16,796cr as of 4QFY2010, Rs158cr turned
into NPAs during the quarter taking the cumulative slippages from restructured
book to Rs1,774cr (10.6% of the restructured loan book). The bank’s restructured
loans outside the RBI scheme stood at Rs12,900cr, indicating cumulative
restructuring/net worth of 43.1% compared to sector average of 68.3%.

Exhibit 7: Trend in asset quality
Gross NPAs Net NPAs Provision coverage (RHS)
(Rs cr) (%)
25,000 70.0

20,000
60.0
15,000
50.0
10,000
40.0
5,000

- 30.0
1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11
Source: Company, Angel Research, Note: NPA coverage excluding technical write-offs till
3QFY2009

Provisioning expenses rose substantially on a yoy basis to Rs1,551cr in 1QFY2011,
on the back of higher NPA provisions (Rs1,733cr) and lower write-back of
investment provisions (Rs298cr).

Exhibit 8: Breakup of provisioning expenses
(Rs cr) 1QFY11 4QFY10 % chg (qoq) 1QFY10 % chg (yoy)
NPA 1,733 2,187 (20.7) 1,344 29.0
Standard Assets 106 72 46.2 14 656.6
Investments (298) 36 - (1,201) (75.2)
Others 10 55 (81.0) 15 (31.4)
Total 1,551 2,349 (34.0) 173 798.1

Operating expenses under control

Operating expenses declined 19.5% qoq and 1.2% yoy to Rs4,859cr driven by a
14.4% qoq and 9.9% yoy fall in staff expenses. Decrease in operating expenses
coupled with robust operating performance improved the cost-to-income ratio to
44.2% compared to 53.7% in 4QFY2010 and 57.2% in 1QFY2010. There was a
write-back of Rs845cr from excess provision on wage revision during the quarter.
The bank made a provision of Rs1,100cr for gratuity during 1QFY2011 against
the estimated liability of Rs2,200cr for FY2011E for the increase in gratuity ceiling.

August 12, 2010 5


Exhibit 9: Breakup of operating expenses
Staff expenses 3,074 3,592 (14.4) 3,411 (9.9)
Overhead expenses 1,785 2,444 (27.0) 1,508 18.4
Total 4,859 6,036 (19.5) 4,920 (1.2)

Exhibit 10: Trend in productivity
Employee Expenses Other Expenses Cost-to-income ratio (RHS)
(Rs cr) (%)
7,500 57 60
6,000 54
52 55
4,500 50
47 50
3,000 46
45 45 44
1,500 45

- 40
1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

Comfortable capital adequacy

The bank has continued to maintain comfortable capital adequacy ratio of above
13.5%. As of 1QFY2011, the overall capital adequacy stood at 13.54% with tier I
forming more than 72.3% of the total CAR.

The bank is likely to come out with a rights issue by the end of FY2011 to sustain
the CAR at comfortable levels. The government has already approved diluting its
stake to 51% from the existing stipulated dilution level of 55%. This provides
significant headroom for dilution with the existing government holding at 59.4%.

Exhibit 11: Comfortable capital adequacy
(%) Tier I Tier II
16.0

12.0 4.9 4.4 4.3 4.1 3.9 3.8

8.0

9.4 9.7 9.8 9.7 9.5 9.8
4.0

-
4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11


August 12, 2010 6


Muted non-interest income, supported strongly by fee income
Total non-interest income growth was muted at 3.4% yoy on account of 75.5% yoy
decline in profit on sale of investments. Non-interest income excluding profit on
sale of investments was up by 23.0% yoy. Fee income went up 29.4% yoy, driven
by robust growth in loan processing charges, non-fund based business,
government business and cross-selling. Forex income increased 6.8% yoy to
Rs503cr. Growth in other non-interest income was driven by the 42.0% growth in
recoveries from written-off accounts.

Exhibit 12: Breakup of non-interest income
CEB 2,410 3,486 (30.9) 1,862 29.4
Treasury 173 426 (59.3) 709 (75.5)
Forex 503 185 172.1 470 6.8
Dividend 377 47 700.7 358 5.3
Others 227 365 (37.8) 169 34.2
Total 3,690 4,509 (18.2) 3,569 3.4

Performance of Associates and Subsidiaries

Advances and deposits of associate banks recorded yoy growth of 18.4% and
16.0%, respectively. Gross and net NPAs of the associate banks stood at 2.1%
and 1.0%, respectively.
Operating profit of associate banks increased 47.4% yoy to Rs1,881cr
(Rs1,276cr). However, net profit of the associate banks declined marginally by
0.5% yoy mainly on account of higher provisioning for NPAs taking the
provision coverage ratio to a healthy 66%.
SBI Life earned PAT of Rs114cr (Rs39cr), registering yoy growth of 192.3%.
AuM of the company increased by 64.0% yoy to reach Rs30,082cr. The
company was ranked second amongst the private insurance companies under
New Business Premium, as on June, 2010.
SBI Capital Markets posted PAT of Rs157cr for 1QFY2011, registering a yoy
growth of 93% after excluding provision of Rs64cr towards syndication fee
sharing payable to SBI.
SBI Funds Management posted PAT of Rs15cr in 1QFY2011 as against Rs14cr
for 1QFY2010.
SBI Cards and Payment Services turned-around in 1QFY2011 with net profit of
Rs3cr compared to loss of Rs24cr in 1QFY2010.
The overall SBI Group recorded net profit growth of 22.0% yoy to Rs3,365cr
(Rs2,759cr) for 1QFY2011.

August 12, 2010 7


Exhibit 13: Yoy growth rates for associate banks
(%) Deposits Advances Operating Profit Net Profit
State Bank of Bikaner & Jaipur 23.8 21.7 34.9 (30.0)
State Bank of Hyderabad 24.6 27.4 53.9 82.6
State Bank of Indore 2.3 9.6 30.5 (76.6)
State Bank of Mysore 17.7 16.9 55.2 35.5
State Bank of Patiala 5.2 12.4 98.6 10.3
State Bank of Travancore 19.6 18.4 12.8 (16.6)
Total 16.0 18.4 47.4 (0.5)

August 12, 2010 8


Investment Arguments

Improving savings market share

Up to FY2007, the bank witnessed a significant decline in CASA market share with
private sector banks pursuing aggressive branch expansion. However, the bank’s
market share of savings deposits expanded by a substantial 270bp to 23.2%
during FY2007-10 (one of the few PSBs to do so) driven by relatively faster branch
expansion (9.5% CAGR v/s 2-5% for most PSBs) leveraging its tremendous trust
factor in the country.

Strongest fee income among PSU banks

SBI has a relatively strong share of fee income owing to its strong corporate and
government business relationships. During FY2010, the bank continued its
dominance with non-interest income/assets at 1.3% (highest among PSU banks).

Asset quality concerns receding

SBI has a gross NPA ratio of 3.1% and net NPA ratio of 1.7%, leading to a low
provision coverage ratio of 60.7% (including technical write-offs) and restructured
loans of around Rs30,000cr, constituting 43% of its net worth, which is lower than
the peer average. We have factored in a slippage ratio of 2.2% for FY2011E
(equal to slippage ratio in FY2010) on a conservative basis. This provides sufficient
margin of safety to our provisions estimates.

Outlook and Valuation

Due to strong CASA and fee income, SBI’s core RoEs have improved over the past
few years and unlike virtually all other PSBs, FY2010 RoEs are below core levels
due to low asset yields, providing scope for upside as the CD ratio improves and
yields normalise to sectoral averages.

At CMP, SBI is trading at 2.1x FY2012E ABV while excluding value of insurance
and capital market subsidiaries, it is trading at 1.7x FY2012E ABV v/s its 5-year
range of 1.3-2.0x and median of 1.7x. We believe this provides reasonable
upside, especially in light of its dominant position and reach, strong growth and
superior earnings quality. We maintain an Accumulate on the stock, with a Target
Price of Rs3,185.

August 12, 2010 9


Exhibit 14: SOTP valuation summary
Company (Rs) Value per share
SBI & Associates 2,956
Life 190
AMC 12
Others (Cap Mkt, Cards, Factors) 28
SOTP value 3,185
Source: Angel Research

Exhibit 15: Key Assumptions
Earlier Estimates Revised Estimates
Particulars (%)
FY2011E FY2012E FY2011E FY2012E
Credit growth 21.0 20.0 21.0 20.0
Deposit growth 21.0 20.0 17.0 20.0
CASA ratio 46.9 46.5 48.5 48.5
NIMs 2.7 2.7 2.8 2.9
Other income growth 5.4 17.3 5.1 17.2
Growth in staff expenses 15.0 19.0 7.0 20.0
Growth in other expenses 15.0 19.0 7.0 20.0
Slippages 2.0 1.7 2.2 1.9
Coverage ratio 70.5 72.7 72.2 73.6
Treasury gain/(loss) (% of investments) 0.3 0.3 0.2 0.2

Exhibit 16: Change in estimates
FY2011E FY2012E
Particulars (Rs cr) Earlier Revised Earlier Revised
% chg % chg
estimates estimates estimates estimates
NII 29,289 30,834 5.3 35,599 37,558 5.5
Non-interest income 16,033 15,980 (0.3) 18,784 18,731 (0.3)
Total income 45,322 46,815 3.3 54,383 56,290 3.5
Operating expenses 23,366 21,741 (7.0) 27,806 26,089 (6.2)
Pre-prov. profit 21,956 25,074 14.2 26,577 30,201 13.6
Provisions & cont. 6,860 8,885 29.5 5,569 7,554 35.6
PBT 15,096 16,189 7.2 21,008 22,646 7.8
Prov. for taxes 5,046 5,417 7.4 7,047 7,604 7.9
PAT 10,050 10,771 7.2 13,961 15,042 7.7

August 12, 2010 10


Exhibit 17: P/ABV band
Price 1.0x 1.5x 2.0x 2.5x 3.0x
(Rs)
4500
4000
3500
3000
2500
2000
1500
1000
500
0

Dec-03

Dec-06

Apr-09
Jul-04

Jul-07
Mar-02

Oct-02

Mar-05

Oct-05

Feb-08

Sep-08

Nov-09
May-03

May-06

Jun-10

Jan-11

Exhibit 18: State Bank of India - P/E Band
Price 5x 10x 15x 20x
3,600

3,000

2,400

1,800

1,200

600

0
Apr-01

Dec-01

Apr-03

Dec-03

Apr-05

Dec-05

Apr-07

Dec-07

Apr-09

Dec-09
Aug-02

Aug-04

Aug-06

Aug-08

Aug-10

Exhibit 19: Discount to Sensex - State Bank of India
Discount to Sensex Avg. Historical Discount
0

(10)

(20)

(30)

(40)

(50)

(60)

(70)
Aug-07

Aug-08

Aug-09

Aug-10
Jul-06

Dec-06

Dec-07

Dec-08

Dec-09
Apr-07

Apr-08

Apr-09

Apr-10
Mar-06


August 12, 2010 11


Exhibit 20: Angel EPS forecast v/s consensus
Year Angel Forecast Bloomberg Consensus Var.(%)
FY2011E 169.7 172.0 (1.4)
FY2012E 236.9 216.3 9.5
Source: Company, Angel Research, Bloomberg

Exhibit 21: Recommendation summary
CMP Tgt. Price Upside FY2012E FY2012E FY2012E FY10-12E FY2012E FY2012E
Company Reco
(Rs) (Rs) (%) P/ABV (x) Tgt P/ABV (x) P/E (x) CAGR in EPS (%) RoA (%) RoE (%)
AxisBk Buy 1,317 1,688 28.2 2.5 3.2 13.1 27.4 1.6 20.5
FedBk Buy 324 409 26.3 0.9 1.2 7.0 30.7 1.4 14.4
HDFCBk Buy 2,075 2,514 21.2 3.3 4.0 17.3 36.5 1.7 20.6
ICICIBk Buy 964 1,211 25.6 1.9 2.5 15.6 31.0 1.4 15.5
SIB Neutral 200 - - 1.2 - 7.0 17.1 1.0 17.8
YesBk Neutral 306 - - 2.5 - 15.4 18.7 1.3 17.1
BOI Neutral 462 - - 1.4 - 7.3 38.0 0.9 20.5
CorpBk Neutral 594 - - 1.1 - 5.7 13.4 1.0 20.5
DenaBk Accumulate 101 109 7.8 0.9 1.0 4.8 7.3 0.8 19.2
IndBk Accumulate 230 256 11.1 1.1 1.2 5.7 7.6 1.3 21.0
IOB Buy 127 147 15.6 0.9 1.1 6.3 25.1 0.7 14.9
OBC Neutral 403 - - 1.0 - 6.0 21.6 0.9 18.3
PNB Neutral 1,132 - - 1.6 - 7.6 9.3 1.2 21.9
SBI Accumulate 2,784 3,185 14.4 1.7 2.0 11.8 26.5 1.1 20.1
UcoBk Accumulate 102 111 9.4 0.9 1.0 4.2 15.1 0.8 25.5
UnionBk Accumulate 329 355 7.8 1.3 1.4 5.8 17.1 1.1 24.1
Source: Company, Angel Research; Note: P/ABVs of the core banks.

August 12, 2010 12


Income statement
Y/E March (Rs cr) FY06 FY07 FY08 FY09 FY10 FY11E FY12E
Net Interest Income 15,636 15,058 17,021 20,873 23,671 30,834 37,558
- YoY Growth (%) 12.1 (3.7) 13.0 22.6 13.4 30.3 21.8
Other Income 7,447 7,406 9,398 12,902 15,200 15,980 18,731
- YoY Growth (%) 4.6 (0.6) 26.9 37.3 17.8 5.1 17.2
Operating Income 23,083 22,464 26,420 33,775 38,872 46,815 56,290
- YoY Growth (%) 9.6 (2.7) 17.6 27.8 15.1 20.4 20.2
Operating Expenses 11,725 11,824 12,609 15,649 20,319 21,741 26,089
- YoY Growth (%) 16.4 0.8 6.6 24.1 29.8 7.0 20.0
Pre - Provision Profit 11,358 10,641 13,811 18,127 18,553 25,074 30,201
- YoY Growth (%) 3.3 (6.3) 29.8 31.2 2.4 35.1 20.4
Prov. & Cont. 4,452 3,016 3,373 3,736 4,396 8,885 7,554
- YoY Growth (%) (0.4) (32.3) 11.8 10.8 17.7 102.1 (15.0)
Profit Before Tax 6,905 7,625 10,438 14,391 14,157 16,189 22,646
- YoY Growth (%) 5.9 10.4 36.9 37.9 (1.6) 14.4 39.9
Prov. for Taxation 2,499 3,083 3,709 5,058 4,759 5,417 7,604
- as a % of PBT 36.2 40.4 35.5 35.2 33.6 33.5 33.6
PAT 4,407 4,541 6,729 9,332 9,398 10,771 15,042
- YoY Growth (%) 2.4 3.1 48.2 38.7 0.7 14.6 39.6

Balance sheet
Y/E March (Rs cr) FY06 FY07 FY08 FY09 FY10 FY11E FY12E
Share Capital 526 526 631 635 635 635 635
Reserves & Surplus 27,118 30,772 48,401 57,313 65,314 73,618 85,238
Deposits 380,046 435,521 537,404 742,073 804,116 940,816 1,128,979
- Growth (%) 3.5 14.6 23.4 38.1 8.4 17.0 20.0
Borrowings 30,641 39,703 51,727 53,714 71,031 83,107 99,728
Tier 2 Capital 4,986 16,169 21,289 30,344 31,980 38,696 46,435
Other Liab & Prov. 50,552 43,389 62,073 80,353 80,337 95,224 116,873
Total Liabilities 493,870 566,082 721,526 964,432 1,053,414 1,232,096 1,477,889
Cash balances 21,653 29,076 51,535 55,546 61,291 65,857 79,029
Bank balances 22,907 22,892 15,932 48,858 34,893 40,825 48,990
Investments 162,534 149,149 189,501 275,954 285,790 314,708 377,204
Advances 261,642 337,336 416,768 542,503 631,914 764,616 917,539
- Growth (%) 29.3 28.9 23.5 30.2 16.5 21.0 20.0
Fixed Assets 2,753 2,819 3,373 3,838 4,413 5,008 5,830
Other Assets 22,381 24,809 44,417 37,733 35,113 41,082 49,298
Total Assets 493,870 566,082 721,526 964,432 1,053,414 1,232,096 1,477,889
- Growth (%) 7.3 14.7 27.3 33.8 9.2 17.0 20.0

August 12, 2010 13


Ratio analysis
Particulars FY06 FY07 FY08 FY09 FY10 FY11E FY12E
Profitability ratios (%)
NIMs 3.5 3.0 2.8 2.6 2.5 2.8 2.9
Cost to Income Ratio 50.8 52.6 47.7 46.3 52.3 46.4 46.3
RoA 0.9 0.8 1.0 1.1 0.9 0.9 1.1
RoE 17.7 15.7 18.1 18.7 16.2 16.4 20.1
B/S ratios (%)
CASA Ratio 47.6 48.5 47.0 41.6 47.3 48.5 48.5
Credit/Deposit Ratio 68.8 77.5 77.6 73.1 78.6 81.3 81.3
CAR 11.9 12.3 13.5 13.2 12.3 10.7 10.6
- Tier I 9.4 8.0 9.1 8.7 8.7 7.3 7.0
Asset Quality (%)
Gross NPAs 3.6 2.9 3.0 2.9 3.0 2.5 2.1
Net NPAs 1.9 1.6 1.8 1.8 1.7 0.7 0.6
Slippages 2.1 1.9 2.3 2.6 2.2 2.2 1.9
Loan Loss Prov./Avg. Assets 0.0 0.3 0.3 0.3 0.5 0.7 0.5
Provision Coverage 49.0 47.4 42.2 39.2 44.4 72.2 73.6
Per Share Data (Rs)
EPS 83.7 86.3 106.6 147.0 148.0 169.7 236.9
ABVPS 477.8 542.3 709.7 824.2 944.5 1,160.8 1,348.2
DPS 14.0 14.0 21.5 29.0 30.0 31.0 44.0
Valuation Ratios
PER (x) 33.3 32.3 26.1 18.9 18.8 16.4 11.8
P/ABVPS (x) 5.8 5.1 3.9 3.4 2.9 2.4 2.1
Dividend Yield 0.5 0.5 0.8 1.0 1.1 1.1 1.6
DuPont Analysis (%)
NII 3.3 2.9 2.7 2.5 2.4 2.7 2.8
(-) Prov. Exp. 0.9 0.6 0.5 0.4 0.4 0.8 0.6
Adj. NII 2.4 2.3 2.1 2.0 1.9 1.9 2.2
Treasury 0.1 0.1 0.3 0.3 0.2 0.1 0.0
Int. Sens. Inc. 2.5 2.4 2.4 2.4 2.1 2.0 2.3
Other Inc. 1.4 1.2 1.2 1.2 1.3 1.3 1.3
Op. Inc. 3.9 3.6 3.6 3.6 3.4 3.3 3.6
Opex 2.5 2.2 2.0 1.9 2.0 1.9 1.9
PBT 1.4 1.4 1.6 1.7 1.4 1.4 1.7
Taxes 0.5 0.6 0.6 0.6 0.5 0.5 0.6
RoA 0.9 0.8 1.0 1.1 0.9 0.9 1.1
Leverage (x) 20.0 19.5 17.5 17.2 17.7 17.7 18.3
RoE 17.7 15.7 18.1 18.7 16.2 16.4 20.1

August 12, 2010 14


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
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risks of such an investment.

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investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
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Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
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Disclosure of Interest Statement State Bank of India
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

August 12, 2010 15

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