Prabhudas Lilladher recommend SBI for target of INR350 after mixed set of numbers

1.
State Bank of India
Better performance; higher restructuring plays spoilsport
May 24, 2015
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Q4FY15 Result Update
Nitin Kumar
nitinkumar@plindia.com
+91‐22‐66322236
Pritesh Bumb
priteshbumb@plindia.com
+91‐22‐66322232
Rating BUY
Price Rs282
Target Price Rs350
Implied Upside 24.1%
Sensex 27,958
Nifty 8,459
(Prices as on May 24, 2015)
Trading data
Market Cap. (Rs bn) 2,108.7
Shares o/s (m) 7,465.7
3M Avg. Daily value (Rs m) 9908.2
Major shareholders
Promoters 58.60%
Foreign 11.72%
Domestic Inst. 18.73%
Public & Other 10.95%
Stock Performance
(%) 1M 6M 12M
Absolute 2.5 (8.5) 2.6
Relative 0.6 (7.2) (10.6)
How we differ from Consensus
EPS (Rs) PL Cons. % Diff.
2016 20.4 23.6 ‐13.6
2017 24.4 29.8 ‐17.9
Price Performance (RIC: SBI.BO, BB: SBIN IN)
Source: Bloomberg
0
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May‐14
Jul‐14
Sep‐14
Nov‐14
Jan‐15
Mar‐15
May‐15
(Rs)
SBIN reported mixed set of numbers with fresh slippages declining for the third
quarter in a row coming out as a big positive. However, higher restructuring and
bad loan sale to ARC diluted the performance. Revenue growth remains strong led
by seasonally strong other income (up 29% YoY/63% QoQ), while NII growth
adjusted for one‐off (interest on tax refund) stood tepid, following modest loan
growth. SBIN stepped up its NPL provisioning and sold bad loans to ARC leading to
68bps QoQ improvement in net NPL ratio, while coverage ratio also increased by
696bps QoQ to 51.4%. We are pleased with the improving trend in fresh slippages
and note that adjusting for potential slippages from fresh restructuring and bad‐
loan sale, net stressed assets for SBIN has declined. We cut our FY16E/FY17E
earnings to factor in slower business growth and higher credit cost. However, our
target price stands unchanged at Rs350 as we roll‐forward our valuations to Mar‐
2017E ABV.
 Other income drives revenue growth; Adj. NII grew 8.5% YoY: SBIN reported
29% YoY growth in other income, led by strong sequential jump in fee income
(seasonal in nature), bond‐gains (Rs16.59 bn) and higher recoveries from
written‐off account (Rs8.7bn). Adjusted for interest on income tax refund, NII
grew 8.5% YoY following loan growth. The recent cut in base rate will likely
affect NII going ahead as management mentioned that their cost of deposits has
been quite sticky. SBIN guided for 13‐14% loan growth during FY16 and
suggested for early signs of revival in project lending related to renewable
energy projects though the size remains small at this stage.
Contd...2
Key financials ( Y/e March) 2014 2015 2016E 2017E
Net interest income (Rs m) 492,822 550,156 614,782 686,973
Growth (%) 11.2 11.6 11.7 11.7
Operating profit (Rs m) 321,092 389,139 431,360 497,134
PAT (Rs m) 108,912 131,020 153,336 184,800
EPS (Rs) 15.2 17.5 20.4 24.4
Growth (%) (26.9) 15.3 16.3 19.7
Net DPS (Rs) 1.5 3.5 3.7 3.8
Profitability & Valuation 2014 2015 2016E 2017E
NIM (%) 2.93 2.87 2.82 2.75
RoAE (%) 10.0 10.6 11.3 12.3
RoAA (%) 0.65 0.68 0.70 0.74
P / BV (x) 1.8 1.6 1.5 1.4
P / ABV (x) 2.7 2.2 2.0 1.7
PE (x) 18.6 16.1 13.8 11.6
Net dividend yield (%) 0.5 1.2 1.3 1.3
Source: Company Data; PL Research

2.
May 24, 2015 2
State Bank of India
 Slippages maintained its downward trend; loss on ARC sale stands
manageable: Asset quality improved sharply as fresh slippages declined to
Rs47.7bn (1.5% annualized v/s 2.5% annualized in 9MFY15), while the bank also
sold loans to ARC (outstanding SRs of Rs47.33bn) at ~65% haircut. We believe
that the unamortized loss on ARC sale amounting to Rs21.8bn (to be provided
over two years) is not a big challenge, given that SBIN made NPL provisioning of
Rs187bn in FY15 itself.
Management explained that higher restructuring occurred not only due to
imminent stress but because of the shutdown of restructuring window from
Q1FY16 and was mainly led by smaller accounts. Overall, we still like the sharp
improvement in net NPL (20% QoQ decline) to manageable 2.1% and improving
trend in fresh slippages, which will help control credit cost, going ahead. We note
that even adjusting for potential slippages from fresh restructuring and bad‐
loan sale, net stressed assets for SBIN has declined.
 Remain optimistic on asset quality; fresh restructuring high but not horrific:
SBIN stock price declined 7% from the high post results as the bank restructured
loans worth ~Rs119bn (PLe: Rs50bn) taking the total restructured assets
portfolio to 4.3%. However, we don’t read much into higher restructuring done
during the quarter as we don’t expect it to be setting up a new normal.
 Return ratios to improve; reiterate ‘BUY’: We estimate SBIN’s RoA to improve
gradually over the next two years as net NPLs have declined to more manageable
level of 2.1% (from peak of 3.24% in Q3FY14), while prospects of further write‐
down on SR portfolio remains low, given hefty haircuts already taken and
improved pricing discipline while selling bad loans to ARC following revised RBI
regulations. We cut our FY16E/FY17E earnings to factor in slower business growth
and higher credit cost but our target price stands unchanged at Rs350 as we roll
forward our valuations to Mar‐2017E ABV.

3.
May 24, 2015 3
State Bank of India
Exhibit 1: Asset quality to improve gradually; One‐off gains prudently ploughed into
provisions
(Rs m) 4QFY15 4QFY14 YoY gr. (%) 3QFY15 QoQ gr. (%)
Interest income 401,012 358,576 11.8 385,462 4.0
Interest Expenses 253,894 229,548 10.6 247,695 2.5
Net interest income (NII) 147,118 129,028 14.0 137,766 6.8
‐ Treasury income 16,590 4,010 313.7 9,195 80.4
Other income 85,153 65,857 29.3 52,378 62.6
Total income 232,270 194,885 19.2 190,144 22.2
Operating expenses 108,177 88,606 22.1 97,200 11.3
‐Staff expenses 65,665 52,792 24.4 58,420 12.4
‐Other expenses 42,511 35,815 18.7 38,779 9.6
Operating profit 124,094 106,278 16.8 92,945 33.5
Core operating profit 107,504 102,268 5.1 83,749 28.4
Total provisions 65,929 58,911 11.9 52,349 25.9
Profit before tax 58,165 47,367 22.8 40,596 43.3
Tax 20,744 16,960 22.3 11,495 80.5
Profit after tax 37,420 30,407 23.1 29,101 28.6
Balance sheet (Rs)
Deposits 15,767,933 13,944,085 13.1 15,100,769 4.4
Advances 13,000,264 12,098,287 7.5 12,325,449 5.5
Gross NPL (Rs m) 567,253 616,054 (7.9) 619,915 (8.5)
Net NPL (Rs m) 275,906 310,961 (11.3) 344,687 (20.0)
Profitability ratios
RoaA 0.8 0.7 7 0.6 14
RoaE 11.2 10.5 68 11.1 7
NIM 3.2 3.2 (1) 3.1 4
Asset Quality
Cum. Restruc. assets (Rs m) 712,290 589,380 20.9 667,040 6.8
Gross NPL ratio 4.3 5.0 (70) 4.9 (65)
Net NPL ratio 2.1 2.6 (45) 2.8 (68)
Coverage ratio 51.4 49.5 184 44.4 696
Rest. Std. assets/ Total adv. 4.3 3.6 74 3.8 52
Business & Other Ratios
Low‐cost deposit mix 42.9 44.4 (155) 42.6 30
Cost‐income ratio 46.6 45.5 111 51.1 (455)
Non int. inc / total income 36.7 33.8 287 27.5 911
Credit deposit ratio 82.4 86.8 (432) 81.6 83
CAR 12.0 12.4 (44) 12.0 (3)
Tier‐I 9.6 9.7 (12) 9.4 22
Source: Company Data, PL Research

4.
May 24, 2015 4
State Bank of India
Q4FY15 analysts meet takeaways:
Loan Book & Business outlook:
 Bank is targeting to grow loan book at 13‐14% in FY16. Loan book growth
including sale to ARCs & substituted loans to CP/CDs would have been 10‐11% in
FY15.
 Projects pipeline is being seen in renewable and hydro carbon segments
currently. In FY16, Bank disbursements to infrastructure likely to be at Rs130‐
140bn.
 Home loans – Growth in above Rs3m category has been strong 32% YoY, lifting
overall growth to 14% YoY. SBIN has tied up with 8,000 builders pan‐India, so
better growth prospects are expected in FY16.
Margins:
 Margins in domestic business have achieved guidance of 3.5% (now at 3.54%).
Base rate could impact NIMs to some extent as cost of deposits remain sticky.
Opex/Branches:
 Provided Rs7.48bn (Rs7.2bn in Q3FY15) on wage revision and Rs12.9bn (Rs8.2bn
in Q3FY15) on pension/gratuity. Discount rate assumption at 8.21% on pension
liabilities.
 Other expenses were high due to un‐budgeted expenses on adding accounts
and associated activities; adding business correspondents. Will target to bring it
down to 10% in FY16 from 13‐15% currently.
 Branch addition activity will be strategic & measured and will be taken in
accordance with group strategy.
Asset Quality:
 Slippages – Fresh slippages in Q4FY15 were Rs47.7bn of which Rs20bn were
from restructured a/c. Top three sectors contributing to this were construction
at Rs7.8bn, Textiles at Rs3.45bn and Iron & Steel at Rs3.3bn.
 Restructuring – Restructured Rs118.9bn in Q4FY15. Top three sectors
contributing were from power, sugar and glass sectors, constituting Rs10bn each
of total restructuring. Huge restructuring occurred due to closing down of
regulatory forbearance, not only due to imminent stress, mainly in smaller
accounts.
 Sale to ARC ‐ Sold Rs43bn (incl. Rs4.85bn from written‐off a/c) to ARC at
consideration of Rs12.3bn of which cash component is Rs2.24bn and SRs of
Rs10bn, also made Rs11bn of provisions for sale of NPA and hence, loss on sale
to ARC is Rs16.9bn which will be amortized in eight quarters. Net SRs on book at
Rs47.33bn and total unamortized provisions stands at Rs21.8bn.

5.
May 24, 2015 5
State Bank of India
 Agriculture NPA in AP at ~Rs5bn still to be recovered. Agriculture NPA could
spike up on seasonality in Q1FY16.
 O/s gross NPA in home loans at 0.4%, while on car loans at 0.62%.
Others:
 Have requested for two additional MD positions apart from four existing
currently. Additional MDs position will be for CFO and risk & Compliance
division.
 Other interest includes Rs10bn of interest on IT refund against Rs2.7bn in
Q4FY14.
Exhibit 2: Global NIMs improved 4bp q‐q to 3.16% led by resiliency in domestic margins
3.07%
3.62%
3.79%
4.05%
3.89% 3.57%
3.34%
3.40%
3.30%
3.16%
3.22%
3.21%
3.17%
3.13%
3.11%
3.12%
3.16%
2.50%
2.80%
3.10%
3.40%
3.70%
4.00%
4.30%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
NIM (%)
Source: Company Data, PL Research
Exhibit 3: Loan growth remained soft as SBIN maintains focus on large corporates (AA
/AAA) and retail segments. Including substituted loans (CP/CDs) loan growth stood at 11%
Loan break up 4QFY15 4QFY14 % chg y‐y 3QFY15 % chg q‐q
Total Advances 13,354,240 12,451,220 7.3 12,654,830 5.5
Large 2,717,780 2,427,190 12.0 2,396,180 13.4
Mid 2,277,550 2,283,840 (0.3) 2,206,830 3.2
SME 1,814,730 1,797,730 0.9 1,579,420 14.9
Agri 1,474,570 1,422,770 3.6 1,595,370 (7.6)
International 2,345,320 2,143,020 9.4 2,246,730 4.4
Retail 2,724,290 2,376,670 14.6 2,602,260 4.7
Home 1,592,370 1,407,380 13.1 1,529,050 4.1
Auto 321,490 279,250 15.1 307,010 4.7
Education 154,640 142,600 8.4 152,950 1.1
Other retail 655,790 547,440 19.8 613,250 6.9
Source: Company Data, PL Research

6.
May 24, 2015 6
State Bank of India
Core fee growth stands modest; dividend/ treasury gains/ recovery
boost other income
 Fee income showed a strong sequential pick‐up – seasonal in nature, however
reported modest 9.7% YoY growth.
 Transaction fee growth improved as hike in charges effected by the bank starts
to show up in numbers.
 Govt business volume remains robust but as most business is happening
through electronic systems fees here have not improved as much.
 Recovery from written‐off accounts, investment profits and higher dividend
from subsidiaries still drove 29% YoY growth in other income.
Exhibit 4: Core fee income growth was sub 10% on slow FX income &
loan growth, but transaction related fees reported better trends
‐20%
‐10%
0%
10%
20%
30%
40%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Core fees growth YoY
Source: Company Data, PL Research
Exhibit 5: CASA ratio remained stable aided by seasonal year‐end
growth in current account deposits
35.0%
38.0%
41.0%
44.0%
47.0%
50.0%
53.0%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Low Cost deposits(%)
Source: Company Data, PL Research
Operating expenses increased on higher gratuity/pension provisions
 Operating expenses increased 22% YoY as the bank made higher
pension/gratuity provisions for its employees, while the overhead expenses also
increased by ~19% YoY due to un‐budgeted expenses on adding
accounts/associated activities and business correspondents. The core‐cost
income ratio, however, still improved by 356bps QoQ to 50.2%.
 SBIN provided Rs7.48bn (Rs7.2bn in Q3FY15) on wage revision and Rs12.9bn
(Rs8.2bn in Q3FY15) on pension/gratuity.
 Employee count again declined by 1,763 and bank expects ~9k employees to
retire every year for next three years.
 Opex on ATMs will likely increase, going forward, as most of the machines are
quite old now but the bank plans to recover the cost by charging ATM usage fee
from the customers, in accordance with the revised RBI rules.

7.
May 24, 2015 7
State Bank of India
Exhibit 6: Opex increased on adjustments to wage provisions, while some unbudgeted
costs in other opex were booked in Q4FY15
‐5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Opex growth YoY
Source: Company Data, PL Research
Asset quality: Restructuring increased sharply but lower slippages
comforts us
 Fresh slippages declined to ~Rs47.7bn from Rs70.4bn in Q3FY15 ‐ Asset quality
improved sharply as fresh slippages declined to Rs47.7bn (1.5% annualized v/s
2.5% annualized in 9MFY15Mid‐corporate, SME and agriculture portfolios
continue to account for bulk of the slippages. Slippage trend in other segments,
especially large corporate, retail remained low which is encouraging.
 Seasonal increase in agriculture NPA could occur in Q1FY16 – Agriculture NPA
could spike up on seasonality in Q1FY16. Agriculture NPA in AP at ~Rs5bn still to
be recovered.
 ARC sale and incremental provisioning requirement – SBIN sold loans to ARC
(outstanding SRs of Rs47.33bn) at ~65% haircut. We believe that the
unamortized loss on ARC sale amounting to Rs21.8bn (to be provided over next
two years) is not a big challenge, given that SBIN made NPL provisioning of
Rs187bn in FY15 itself.
 Fresh restructuring increased sharply but we don’t read much into it – SBIN
restructured Rs119bn worth of loans, much higher than our/street estimates.
However, we don’t read much into this as we don’t expect it to be setting up a
new normal. Management explained that higher restructuring occurred not only
due to imminent stress but because of the shutdown of restructuring window
from Q1FY16 and was mainly led by smaller accounts. Overall, we still liked the
sharp improvement in net NPL (20% QoQ decline) to manageable 2.1% and
improving trend in fresh slippages, which will help control credit costs, going
ahead. We note that even adjusting for potential slippages from fresh
restructuring and bad‐loan sale the net stressed assets for SBIN has declined.

8.
May 24, 2015 8
State Bank of India
Exhibit 7: Fresh slippages continue to improve; SME/Mid‐corporate and agri sector drives bulk of the slippages
4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
Opening 534,580 511,900 608,920 642,070 678,000 616,010 604,342 607,122 619,915
Additions 58,680 137,660 83,650 114,380 79,420 99,320 77,000 70,430 47,690
Upgradation + Recovery 57,180 29,160 37,970 27,680 84,430 45,470 26,350 6,670 51,610
Write offs 24,180 11,480 12,530 50,770 56,980 65,560 47,870 50,960 48,740
Closing 511,900 608,920 642,070 678,000 616,010 604,300 607,122 619,915 619,915
Slippages (%) 2.32% 5.23% 3.09% 4.06% 2.65% 3.21% 2.52% 2.33% 1.55%
Net slippages (%) 2.26% 1.11% 1.40% 0.98% 2.82% 1.47% 0.86% 0.40% ‐1.71%
Sectoral slippage trend
Corporate 28,200 47320 55,490 79,900 65,300 44,360 40,690 37,140 34,190
‐ Large Corp 2,540 19060 7,530 10,380 670 1,850 710 140 4,370
‐ Mid Corp 25,660 28260 47,960 69,520 64,630 42,510 39,980 37,000 29,820
International 1,310 5320 8,410 2,220 800 1,150 1,290 640 4,780
SME 29,170 85,020 19,740 32,260 13,370 53,820 35,010 32,200 8,730
Total 58,680 137,660 83,640 114,380 79,470 99,330 76,990 69,980 47,770
Source: Company Data, PL Research
Exhibit 8: Asset quality improved on lower slippages and bad loan
sale to ARC done during the quarter
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Gross NPA (%) Net NPA (%)
Source: Company Data, PL Research
Exhibit 9: NPL accretion improved significantly however may not
maintain trend for 1HFY16
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Gross Slippages (%), annualized
Source: Company Data, PL Research

9.
May 24, 2015 9
State Bank of India
Exhibit 10: Change in earnings estimates
Old Revised % Change
FY16E FY17E FY16E FY17E FY16E FY17E
Net interest income (Rs m) 622,746 716,510 614,782 686,973 (1.3) (4.1)
Operating profit (Rs m) 427,311 507,374 431,360 497,134 0.9 (2.0)
Net profit (Rs m) 166,832 206,877 153,336 184,800 (8.1) (10.7)
EPS (Rs) 22.3 28 20.4 24 (8.5) (11.8)
ABVPS (Rs) 149 170 145 164 (3.0) (3.6)
Price target (Rs) 350 350
Recommendation BUY BUY
Source: PL Research
Exhibit 11: We value SBIN at Rs350/share based on SOTP method
PT calculation and upside
Fair price – EVA 274
Fair price ‐ P/ABV 262
Average of the two 268
Value of subs/associates 82
Fair value of consol. entity 350
P/ABV – adjusted for Net NPLs / SRs / slippages from restructured assets 1.8
P/E ‐ Standalone bank 12.0
Current price, Rs 282
Source: Company Data, PL Research
Exhibit 12: SBIN’s: SOTP valuation table
SOTP valuation, FY16E Multiple Stake (%) Revised PT Method
Standalone 1.8 100 268 Avg. of P/ABV & EVA
Subsidiary/associates 33
St Bk of Bikaner 1.2 75% 6 P/ABV
St Bk of Hyderabad 1.3 100% 13 P/ABV
St Bk of Mysore 1.0 92% 5 P/ABV
St Bk of Patiala 0.9 100% 6 P/ABV
St Bk of Travancore 0.9 75% 3 P/ABV
Life insurance venture 12x 74% 20
Appraisal value; 12x new
business multiple
Asset management 63% 4 4.5% of AUMs
Capital Market/DFHI/Others 100% 25
Total 350
Source: Company Data, PL Research

10.
May 24, 2015 10
State Bank of India
Income Statement (Rs m)
Y/e March 2014 2015 2016E 2017E
Int. Earned from Adv. 1,024,841 1,123,439 1,224,266 1,381,199
Int. Earned from Invt. 319,419 370,878 435,161 492,361
Others 19,248 29,654 25,007 26,880
Total Interest Income 1,363,508 1,523,971 1,684,434 1,900,440
Interest expense 870,686 973,814 1,069,652 1,213,467
NII 492,822 550,156 614,782 686,973
Growth (%) 11.2 11.6 11.7 11.7
Treasury Income 20,767 36,182 57,890 92,625
NTNII 164,762 189,577 192,702 194,053
Non Interest Income 185,529 225,759 250,592 286,678
Total Income 1,549,037 1,749,730 1,935,027 2,187,118
Growth (%) 14.2 13.0 10.6 13.0
Operating Expense 357,259 386,776 434,015 476,517
Operating Profit 321,092 389,139 431,360 497,134
Growth (%) 3.3 21.2 10.8 15.2
NPA Provisions 144,785 187,129 193,015 204,041
Investment Provisions 5,633 (5,904) (3,542) 2,125
Total Provisions 159,354 195,995 202,500 221,313
PBT 161,739 193,144 228,860 275,821
Tax Provisions 52,827 62,124 75,524 91,021
Effective Tax Rate (%) 32.7 32.2 33.0 33.0
PAT 108,912 131,020 153,336 184,800
Growth (%) (22.8) 20.3 17.0 20.5
Balance Sheet (Rs m)
Y/e March 2014 2015 2016E 2017E
Par Value 1 1 1 1
No. of equity shares 7,466 7,466 7,566 7,566
Equity 7,466 7,466 7,566 7,566
Networth 1,182,822 1,284,383 1,428,088 1,576,953
Adj. Networth 871,862 1,036,006 1,187,192 1,338,481
Deposits 13,944,085 15,767,933 17,865,068 20,759,209
Growth (%) 15.9 13.1 13.3 16.2
Low Cost deposits 5,984,004 6,764,443 7,896,360 9,196,330
% of total deposits 42.9 42.9 44.2 44.3
Total Liabilities 17,922,346 20,480,799 23,175,405 26,870,108
Net Advances 12,098,287 13,000,264 14,573,296 16,817,584
Growth (%) 15.7 7.5 12.1 15.4
Investments 3,983,082 4,950,274 5,927,348 6,986,616
Total Assets 17,922,346 20,428,632 23,175,405 26,870,108
Source: Company Data, PL Research.
Quarterly Financials (Rs m)
Y/e March Q1FY15 Q2FY15 Q3FY15 Q4FY15
Interest Income 364,871 372,626 385,462 401,012
Interest Expense 232,349 239,880 247,695 253,894
Net Interest Income 132,522 132,746 137,766 147,118
Non Interest Income 42,521 45,708 52,378 85,153
CEB 28,372 31,109 32,906 49,010
Treasury 5,868 4,528 9,195 16,590
Net Total Income 175,043 178,454 190,144 232,270
Operating Expenses 87,166 94,234 97,200 108,177
Employee Expenses 55,646 55,639 58,420 65,665
Other Expenses 31,520 38,595 38,779 42,511
Operating Profit 87,877 84,219 92,945 124,094
Core Operating Profit 82,009 79,691 83,749 107,504
Provisions 34,967 42,750 52,349 65,929
Loan loss provisions 39,035 42,640 47,174 50,054
Investment Depreciation — — — —
Profit before tax 52,910 41,469 40,596 58,165
Tax 19,419 10,465 11,495 20,744
PAT before EO 33,491 31,004 29,101 37,420
Extraordinary item — — — —
PAT 33,491 31,004 29,101 37,420
Key Ratios
Y/e March 2014 2015 2016E 2017E
CMP (Rs) 282 282 282 282
Equity Shrs. Os. (m) 7,466 7,466 7,566 7,566
Market Cap (Rs m) 2,108,696 2,108,696 2,137,075 2,137,075
M/Cap to AUM (%) 11.8 10.3 9.2 8.0
EPS (Rs) 15.2 17.5 20.4 24.4
Book Value (Rs) 158 172 189 208
Adj. BV (100%) (Rs) 106 127 145 164
P/E (x) 18.6 16.1 13.8 11.6
P/BV (x) 1.8 1.6 1.5 1.4
P/ABV (x) 2.7 2.2 2.0 1.7
DPS (Rs) 1.5 3.5 3.7 3.8
Dividend Yield (%) 0.5 1.2 1.3 1.3
Profitability (%)
Y/e March 2014 2015 2016E 2017E
NIM 2.9 2.9 2.8 2.7
RoAA 0.6 0.7 0.7 0.7
RoAE 10.0 10.6 11.3 12.3
Efficiency
Y/e March 2014 2015 2016E 2017E
Cost‐Income Ratio (%) 52.7 49.8 50.2 48.9
C‐D Ratio (%) 86.8 82.4 81.6 81.0
Business per Emp. (Rs m) 117 132 142 157
Profit per Emp. (Rs lacs) 4.9 6.0 6.7 7.7
Business per Branch (Rs m) 1,641 1,648 1,659 1,747
Profit per Branch (Rs m) 7 8 8 9
Asset Quality
Y/e March 2014 2015 2016E 2017E
Gross NPAs (Rs m) 616,054 566,998 599,042 632,003
Net NPAs (Rs m) 310,961 248,376 240,897 238,472
Gr. NPAs to Gross Adv. (%) 5.0 4.4 4.1 3.8
Net NPAs to Net Adv. (%) 2.6 1.9 1.7 1.4
NPA Coverage (%) 49.5 56.2 59.8 62.3
Source: Company Data, PL Research.

11.
May 24, 2015 11
State Bank of India
Prabhudas Lilladher Pvt. Ltd.
3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai‐400 018, India
Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
Rating Distribution of Research Coverage PL’s Recommendation Nomenclature
45.3%
37.9%
16.8%
0.0%
0%
10%
20%
30%
40%
50%
BUY Accumulate Reduce Sell
% of Total Coverage
BUY : Over 15% Outperformance to Sensex over 12‐months
Accumulate : Outperformance to Sensex over 12‐months
Reduce : Underperformance to Sensex over 12‐months
Sell : Over 15% underperformance to Sensex over 12‐months
Trading Buy : Over 10% absolute upside in 1‐month
Trading Sell : Over 10% absolute decline in 1‐month
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
DISCLAIMER/DISCLOSURES
ANALYST CERTIFICATION
We/I, Mr. Nitin Kumar (B.E, PGDM, CFA), Mr. Pritesh Bumb (MBA, M.com), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
report.
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PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company.
PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of
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PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report.
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