rating: buy | cmp: rs308 | tp:...

August 3, 2019 1

Rating: BUY | CMP: Rs308 | TP: Rs369

Higher risk to asset quality getting inevitable

Quick Pointers

SMA-1 & 2 increase but higher stress of Rs190bn (1% of loans) emerges under

the RBI’s revised framework with majorly from two large accounts

Loans growth was better than industry, NIMs were steady and non-credit

provisions help earnings

SBI’s earnings of Rs23.1bn (PLe: Rs29.4bn) was off from expectations

despite lower provisions from non-credit and lower opex which was offset by

slower topline growth (base had one-off). Bank saw higher slippages of

Rs170.0bn from corporate as well as much elevated in Agri/SME. The Bank

SMA-1 & 2 also increased by Rs3.0bn QoQ to Rs10.0bn (0.5% of loans) but

importantly bank has exposure to 20 standard a/c of Rs190.0bn or 1.0% of

loans (Rs25bn in SMA-2) initiated under the new RBI framework for resolution

of stressed assets with 70% formed two major accounts. The incremental

stress creates higher potential risk to asset quality and provisions impacting

improvement in earnings, while stress from non-corporate also remains high

especially Agri/SME. We factor in marginal hits to asset quality & earnings

(increase CC to 195bps from 140bps for FY20) with revised TP of Rs369 (from

Rs427) and retain BUY with valuations still being reasonable at 1.1x core ABV.

Topline impacted on base effect, opex helps PPOP: NII grew only by 5.2%

YoY with base including large interest booking from NCLT account, but

adjusting the same NII grew by 15% YoY. NIMs marginally moved up to 3.01%

(domestic) on favorable C-D ratio. Non treasury income was slower while

strong control in other opex helped overall operating profit. Bank expects NIMs

to improve to 3.15% as interest rates are getting benign, liquidity for banks

getting better and interest booking from large NPA recoveries.

Loan growth was good; deposits growth slower: Bank’s loan growth rate

improved to 13.5% (though down QoQ) which is led by retail growth of 18%

YoY, while corporate also saw good growth of 12% YoY. Bank expects loan

growth of 12-12.5% in FY20 continued by retail & selectively by corporate as

bank has limited areas of project pipeline. On liabilities: Deposit growth was

slower at 7% YoY with CASA growing at 7% YoY especially CA see higher

growth rate of 8% YoY (highest in some time). Bank also showed slower

aggression on term deposits taking C-D ratio higher to 74%.

Known stress becoming a reality for NPA: Bank’s overall asset quality was

stable with GNPA/NNPA at 7.5%/3.0% but slippages came in high at Rs170bn

with contribution from all segments especially from Agri, SME & Corporate and

this was offset by higher w.off of Rs155bn. Bank maintains its PCR ratio at 61%

(79% incl. technical w.off). Bank revealed Rs190bn of exposure in 20 a/c were

initiated under the revised FRSA which form 1% of loans as potential stress

which is not under SMA and is additionally above the Rs100bn (0.5% of loans)

of SMA-1 & SMA-2. 70% of this incremental stress is formed by two large a/c

in HFC & Power which will add risks to assets quality with provisions of 14%

(not in PCR) leading to higher credit cost & earnings hit.

State Bank of India (SBIN IN)

August 3, 2019

Q1FY20 Result Update

☑ Change in Estimates | ☑ Target | Reco

Change in Estimates

Current Previous

FY20E FY21E FY20E FY21E

Rating BUY BUY

Target Price 369 427

NII (Rs. m) 959,758 1,087,143 1,010,225 1,144,210

% Chng. (5.0) (5.0)

Op. Profit (Rs. m) 610,990 711,665 644,536 735,158

% Chng. (5.2) (3.2)

EPS (Rs.) 12.7 23.5 23.4 33.0

% Chng. (45.8) (28.8)

Key Financials - Standalone

Y/e Mar FY18 FY19 FY20E FY21E

NII (Rs bn) 749 883 960 1,087

Op. Profit (Rs bn) 595 554 611 712

PAT (Rs bn) (65) 9 113 210

EPS (Rs.) (7.3) 1.0 12.7 23.5

Gr. (%) 229.4 (113.2) 1,212.5 85.3

DPS (Rs.) - - 1.0 3.0

Yield (%) - - 0.3 1.0

NIM (%) 2.4 2.7 2.7 2.9

RoAE (%) (3.0) 0.4 5.0 8.7

RoAA (%) (0.2) 0.0 0.3 0.5

P/BV (x) 1.4 1.4 1.3 1.2

P/ABV (x) 2.5 2.0 1.8 1.5

PE (x) (42.0) 319.3 24.3 13.1

CAR (%) 12.6 12.7 12.1 11.6

Key Data SBI.BO | SBIN IN

52-W High / Low Rs.374 / Rs.247

Sensex / Nifty 37,118 / 10,997

Market Cap Rs.2,753bn/ $ 39,562m

Shares Outstanding 8,925m

3M Avg. Daily Value Rs.16570.95m

Shareholding Pattern (%)

Promoter’s 57.88

Foreign 10.85

Domestic Institution 23.77

Public & Others 7.50

Promoter Pledge (Rs bn) -

Stock Performance (%)

1M 6M 12M

Absolute (15.4) 8.5 5.0

Relative (9.2) 6.6 5.1

Pritesh Bumb

[email protected] | 91-22-66322232

Prabal Gandhi

[email protected] | 91-22-66322258

State Bank of India

August 3, 2019 2

Non-NPA provision help earnings but marginally below expectation

Financials (Rs m) Q1FY20 Q1FY19 YoY gr.

(%) Q4FY19

QoQ gr. (%)

Interest income 626,378 588,132 6.5 629,854 (0.6)

Interest Expenses 396,990 370,148 7.3 400,316 (0.8)

Net interest income (NII) 229,388 217,984 5.2 229,538 (0.1)

- Treasury income 4,850 (12,640) NA 5,340 (9.2)

Other income 80,154 66,795 20.0 126,851 (36.8)

Total income 309,542 284,779 8.7 356,390 (13.1)

Operating expenses 177,081 165,047 7.3 187,059 (5.3)

-Staff expenses 109,181 97,084 12.5 104,780 4.2

-Other expenses 67,900 67,963 (0.1) 82,279 (17.5)

Operating profit 132,462 119,731 10.6 169,331 (21.8)

Core operating profit 127,612 132,371 (3.6) 163,991 (22.2)

Total provisions 91,829 192,283 (52.2) 165,019 (44.4)

Profit before tax 40,632 (72,551) NA 4,312 842.3

Tax 17,510 (23,793) NA (4,072) NA

Profit after tax 23,122 (48,759) NA 8,384 175.8

Balance Sheet (Rs bn)

Deposits 29,488 27,478 7.3 29,114 1.3

Advances 21,348 18,758 13.8 21,859 (2.3)

Ratios (%)

RoaA 0.3 (0.6) 82 0.1 16

NIM 2.8 2.8 1 2.8 3

Yield on Advances 8.6 8.6 (1) 8.5 7

Cost of Deposits 5.1 5.1 (4) 5.1 (3)

Asset Quality

Gross NPL (Rs m) 1,684,939 2,128,399 (20.8) 1,727,504 (2.5)

Net NPL (Rs m) 656,239 992,363 (33.9) 658,947 (0.4)

Gross NPL ratio 7.5 10.7 (317) 7.5 -

Net NPL ratio 3.1 5.3 (222) 3.0 6

Coverage ratio 61.1 53.4 768 61.9 (80)

Business & Other Ratios

Low-cost deposit mix 45.1 45.1 3 45.7 (64)

Cost-income ratio 57.2 58.0 (75) 52.5 472

Non int. inc / total income 25.9 23.5 244 35.6 (970)

Credit deposit ratio 72.4 68.3 413 75.1 (269)

CAR 12.9 12.8 6 12.7 17

Tier-I 10.7 10.5 12 10.7 (0)

Source: Company, PL

NII growth was slower at 5.2% on

back of slower interest income

despite NIMs remaining stable

Treasury income was decent, while

fee income was weak

Strong control from other opex has

helped lower overall opex

Non-credit provisions help lower

overall provisions

Loan growth rate remained good at

14%, while deposit growth was

slower

Margins saw marginally gains

Asset quality ended stable but high

slippages of Rs170bn were set-off by

Rs155bn of w.off. Coverage

remained stable at 61%

CASA mix remained stable at 41%

with steady growth at 7% YoY

State Bank of India

August 3, 2019 3

Q1FY20 Analyst Meet Highlights

Business outlook & growth

Liabilities - Average current account growth of 8% YoY is highest ever seen.

Overall deposit growth depends on credit growth.

Loan growth guidance remains at 12% YoY though loan growth was 13.9%

YoY it was down sequentially on seasonality, but on average basis was up

sequentially. Project pipeline has been selective from Oil & Gas for city gas

pipeline or roads or renewable. NBFC Crisis - Will have to find way to improve

flow of credit to NBFC and from them to consumer. Need higher capex from

Govt. which should start from hereon. Personal unsecured for bank is growing

fast but most are salaried customers, with many part of corporate salary

package or money being coming to SBI a/c.

Opex/Margins/Treasury

Staff expenses saw impact from pension provisions of Rs15.0bn incrementally,

while gratuity hit was not there from current quarter.

NIMs improved on favorable C-D ratio despite higher base of interest booking

in Q1FY19. Interest reversals were at Rs27.9bn v/s14.3bn in Q1FY19 and

mostly has been from Agri reversing three years of interest. Bank guides NIMs

to improve to 3.15% from large NCLT recoveries and continued growth

Asset Quality

New stress accounts being resolved under revised FRSA was 20 with

exposure of Rs190bn of which Rs23.0bn is under SMA-2. 70% is formed from

two accounts from HFC & Power. Bank has provided Rs23.0bn of provisions

with 14% provisioning coverage but does not fall under overall PCR. Under the

revised FRSA, additional 18 a/c of Rs291.3bn were being resolved which are

already under NPA.

SMA-1 & SMA-2 is split in 2 parts which is Rs100.0bn in SMA which is below

Rs20.0bn as banking sector exposure and above Rs20.0bn is under the new

framework

Slippages were at Rs170bn during the quarter with Agri slippages of Rs42.4bn,

corporate slippages of Rs53.5bn (Rs23bn from one PSU Maharatna which is

already regularized). SME slippages also came in higher at Rs39.6bn as

dispensation of restructuring has come to an end. Agri slippages were driven

by one state alone of +Rs20.0bn.

Bank maintains its Credit cost guidance at 1.4% for FY20 on back of higher

recoveries from NCLT referred accounts and resolutions under FRSA to help

reduce stress levels.

State Bank of India

August 3, 2019 4

Loan growth has been good and better than industry

13.0%9.7%

7.3%

7.5%6.8%

10.5%12.9%

12.6%

10.7%

7.2%

4.1%

7.3%

0.5% -0.1%1.3%

3.5% 4.0%

8.6%

12.1%13.0%13.8%

-2%0%2%4%6%8%

10%12%14%16%18%20%22%

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

Advances growth YoY(%)

Source: Company, PL

Corporate/Retail drive growth during the quarter

Loan break up (Rs bn) Q1FY20 Q1FY19 YoY gr. (%) Q4FY19 QoQ gr. (%)

Gross Advances 22,383 19,902 12.5 22,935 (2.4)

Total Corporate and SME 10,638 9,762 9.0 11,402 (6.7)

SME 3,099 2,667 16.2 3,027 2.4

Agri 2,011 1,881 6.9 2,027 (0.8)

International 3,099 2,667 16.2 3,027 2.4

Retail 6,636 5,591 18.7 6,478 2.4

Home 4,114 3,202 28.5 4,004 2.7

Auto 717 669 7.3 719 (0.2)

Other Retail 1,805 1,516 19.1 1,756 2.8

Source: Company, PL

Overall margins remain steady with marginal gains on domestic

3.1%3.2%

3.0%3.0%2.9%3.0%

2.8%2.8%2.7%2.7%

2.4%2.4%

2.5%2.5%

2.8%2.7%2.8%2.8% 2.8%

3.5%3.5%

3.3%3.3%3.2%3.3%

3.0%3.0%2.9%2.9%

2.5%2.6%2.6%2.7%

3.0%2.9%2.9%3.0%

3.0%

2.1%

2.4%

2.7%

3.0%

3.3%

3.6%

3.9%

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

NIM (%) Domestic NIM (%)

Source: Company, PL

State Bank of India

August 3, 2019 5

Fee income remains sluggish

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

Core fees growth YoY

Source: Company, PL

CASA mix has remained steady

40%

41%

42%

43%

44%

45%

46%

47%

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

Low Cost deposits(%)

Source: Company, PL

Asset quality steady on back of w.off

1%

3%

5%

7%

9%

11%

13%

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

Gross NPA (%) Net NPA (%)

Source: Company, PL

Gross slippages move up during the quarter

1%

6%

11%

16%

21%

26%

31%1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

Gross Slippages (%), annualized

Source: Company, PL

Slippages high; stress watch list increases sharply but majorly skewed towards certain large accounts

Figures Rs million 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Additions 103,680 300,590 106,270 267,800 328,210 143,490 108,880 65,410 79610 169,950

Slippages (%) - annualized 2.86% 6.43% 2.36% 5.94% 7.19% 2.97% 2.32% 1.34% 1.56% 3.11%

Upgradation + Recovery 22,050 66,800 33,230 44,420 NA 148,560 43.270 66,170 57,120 57,690

Write offs 39,920 131,760 92,580 93,120 NA 100,800 135,380 180,240 172,640 154,820

Gross NPAs 1,123,430 1,778,660 1,861,146 1,991,413 2,234,260 2,128,390 2,058,641 1,877,646 1,727,470 1,684,939

Gross NPA Ratio 6.90% 9.97% 9.83% 10.35% 10.91% 10.70% 9.95% 8.71% 7.53% 7.53%

Net NPAs 969,780 1,077,597 978,963 1,023,701 1,108,547 992,363 948,100 809,435 658,947 656,239

Net NPA Ratio 5.19% 5.97% 5.43% 5.61% 5.73% 5.29% 4.84% 3.95% 3.01% 3.07%

Provision Coverage Ratio 45.5% 42.7% 47.4% 48.6% 50.4% 53.4% 53.9% 56.9% 61.9% 61.1%

SMA 1 & SMA 2 31,870 23,440 12,320 170,590 77,620 102,890

% of loans 0.16% 0.12% 0.06% 0.83% 0.36% 0.53%

Under Resolution Framework

Standard 191,420

% of Loans 0.99%

NPA 291,360

Net Stressed assets (% of loans)

5.19% 5.97% 5.43% 5.61% 5.89% 5.42% 4.90% 4.78% 3.37% 4.59%

Source: Company, PL

State Bank of India

August 3, 2019 6

SMA 1 & 2 increase, while higher stress under new framework

78

103

165

0

50

100

150

200

250

300

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

(Rs

bn

)

Textile Oil & Gas Iron & Steel PowerRoads/EPC Chemicals Telecom OthersSMA 1 & 2 Resolutions

133

244213

103

290 246

216

171

268

Source: Company, PL

Return ratios to improve only from FY21 onwards

RoAE decomposition (%) FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E

Net interest income 2.9 2.9 2.6 2.7 2.2 2.5 2.6 2.8

Treasury income 0.2 0.3 0.3 0.6 0.4 0.1 0.1 0.1

Other Inc. from operations 0.9 0.9 1.0 0.9 0.9 0.9 0.9 0.9

Total income 4.0 4.0 3.9 4.2 3.5 3.5 3.7 3.8

Employee expenses 1.3 1.2 1.1 1.2 1.0 1.2 1.2 1.2

Other operating expenses 0.8 0.8 0.8 0.9 0.8 0.8 0.8 0.8

Operating profit 1.9 2.0 2.0 2.1 1.8 1.6 1.7 1.9

Tax 0.3 0.3 0.2 0.0 (0.3) 0.1 0.2 0.3

Loan loss provisions 0.9 1.0 1.3 2.1 2.2 1.2 1.0 0.8

RoAA 0.6 0.7 0.5 (0.1) (0.2) 0.3 0.5 0.7

RoAE 10.0 10.6 7.3 (1.1) (3.5) 0.4 5.6 9.7

Source: Company Data, PL Research

Change in estimates table – We tweak estimates to factor in

higher stress from certain accounts despite recoveries

(Rs mn) Old Revised %Change

FY20E FY21E FY20E FY21E FY20E FY21E

Net interest income 1,010,225 1,144,210 959,758 1,087,143 (5.0) (5.0)

Operating profit 644,536 735,158 610,990 711,665 (5.2) (3.2)

Net profit 208,735 294,433 113,168 209,748 (45.8) (28.8)

EPS (Rs) 23.4 33.0 12.7 23.5 (45.8) (28.8)

ABVPS (Rs) 193 225 172 199 (10.7) (11.3)

Price target (Rs) 427 369 (13.7)

Recommendation BUY BUY

Source: Company, PL

State Bank of India

August 3, 2019 7

We revise our TP to Rs369 (from Rs427) based on Mar-21 ABV &

SOTP

PT calculation and upside

Terminal growth 5.0%

Market risk premium 6.5%

Risk-free rate 7.5%

Adjusted beta 1.05

Cost of equity 14.3%

Fair price - P/ABV 277

Value of subs/associates 91

Fair value of consol. entity 369

P/ABV – Standalone bank 1.4

P/E - Standalone bank 11.8

Current price, Rs 308

Upside (%) 19%

Dividend Yield (%) 1%

Total Return 20%

Source: Company, PL

SBIN’s: SOTP valuation table

SOTP valuation, FY19E Stake (%) Revised

PT Method

Standalone 100 277 Avg. of P/ABV & EVA

Life insurance venture 62% 57 2.9x EV & 18.5x New Biz multiple

Asset management 74% 10 5% of AUMs

Capital Market/DFHI/Others 100% 24 P/E model

Total 369

Source: Company, PL

SBIN - one year forward P/ABV trends

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

Aug-1

3

Nov-1

3

Feb-1

4

May-1

4

Aug-1

4

Nov-1

4

Feb-1

5

May-1

5

Aug-1

5

Nov-1

5

Feb-1

6

May-1

6

Aug-1

6

Nov-1

6

Feb-1

7

May-1

7

Aug-1

7

Nov-1

7

Feb-1

8

May-1

8

Aug-1

8

Nov-1

8

Feb-1

9

May-1

9

Aug-1

9

P/ABV (x) 3 yr avg. avg. + 1 SD avg. - 1 SD

Source: Company, PL

State Bank of India

August 3, 2019 8

Income Statement (Rs. m)


Int. Earned from Adv. 1,413,632 1,616,402 1,874,007 2,138,901

Int. Earned from invt. 703,376 744,062 691,162 686,803

Others 65,485 56,432 50,928 49,545

Total Interest Income 2,204,993 2,428,687 2,629,776 2,889,365

Interest Expenses 1,456,456 1,545,198 1,670,018 1,802,222

Net Interest Income 748,537 883,489 959,758 1,087,143

Growth(%) 1.4 4.7 8.4 12.0

Non Interest Income 446,007 367,749 397,169 432,914

Net Total Income 1,194,544 1,251,238 1,356,927 1,520,057

Growth(%) (0.6) 5.5 8.2 9.8

Employee Expenses 331,787 410,547 443,391 483,296

Other Expenses 238,453 254,207 269,460 291,016

Operating Expenses 599,434 696,877 745,937 808,392

Operating Profit 595,110 554,360 610,990 711,665

Growth(%) 0.1 (6.8) 10.2 16.5

NPA Provision 713,742 546,177 453,952 393,663

Total Provisions 750,392 538,286 443,333 400,927

PBT (155,282) 16,075 167,657 310,738

Tax Provision (89,808) 7,453 54,488 100,990

Effective tax rate (%) 57.8 46.4 32.5 32.5

PAT (65,475) 8,622 113,168 209,748

Growth(%) 262.5 (113.2) 1,212.5 85.3

Balance Sheet (Rs. m)


Face value 1 1 1 1

No. of equity shares 8,925 8,925 8,925 8,925

Equity 8,925 8,925 8,925 8,925

Networth 2,191,286 2,209,138 2,311,543 2,489,002

Growth(%) 3.5 0.8 4.6 7.7

Adj. Networth to NNPAs 1,108,547 658,947 603,902 504,604

Deposits 27,063,433 29,113,860 31,588,538 34,336,741

Growth(%) 4.7 7.6 8.5 8.7

CASA Deposits 12,039,484 12,976,272 13,835,780 15,073,829

% of total deposits 44.5 44.6 43.8 43.9

Total Liabilities 34,547,520 36,809,142 39,877,952 43,318,358

Net Advances 19,348,802 21,858,769 24,700,409 27,787,960

Growth(%) 3.5 13.0 13.0 12.5

Investments 10,609,867 9,670,219 9,666,394 9,430,328

Total Assets 34,547,520 36,809,142 39,877,952 43,318,358

Growth (%) 4.5 6.5 8.3 8.6

Asset Quality


Gross NPAs (Rs m) 2,234,275 1,727,504 1,645,560 1,575,345

Net NPAs (Rs m) 1,108,547 658,947 603,902 504,604

Gr. NPAs to Gross Adv.(%) 10.9 7.5 6.4 5.5

Net NPAs to Net Adv. (%) 5.7 3.0 2.4 1.8

NPA Coverage % 50.4 61.9 63.3 68.0

Profitability (%)


NIM 2.4 2.7 2.7 2.9

RoAA (0.2) 0.0 0.3 0.5

RoAE (3.0) 0.4 5.0 8.7

Tier I 10.5 10.7 10.2 9.9

CRAR 12.6 12.7 12.1 11.6


Quarterly Financials (Rs. m)

Y/e Mar Q2FY19 Q3FY19 Q4FY19 Q1FY20

Interest Income 587,935 622,766 629,854 626,378

Interest Expenses 378,878 395,856 400,316 396,990

Net Interest Income 209,057 226,910 229,538 229,388

YoY growth (%) 4.5 9.6 11.3 7.3

CEB 50,150 47,240 85,890 51,770

Treasury - - - -

Non Interest Income 93,751 80,352 126,851 80,154

Total Income 681,685 703,118 756,705 706,532

Employee Expenses 96,964 111,719 104,780 109,181

Other expenses 66,795 69,293 82,279 67,900

Operating Expenses 163,759 181,013 187,059 177,081

Operating Profit 139,049 126,250 169,331 132,462

YoY growth (%) (30.5) 7.4 6.6 10.6

Core Operating Profits - - - -

NPA Provision 101,845 139,708 173,358 116,485

Others Provisions 120,922 60,062 165,019 91,829

Total Provisions 120,922 60,062 165,019 91,829

Profit Before Tax 18,127 66,187 4,312 40,632

Tax 8,678 26,639 (4,072) 17,510

PAT 9,449 39,548 8,384 23,122

YoY growth (%) (40.2) (263.7) (110.9) (147.4)

Deposits 28,074,201 28,305,377 29,113,860 29,488,207

YoY growth (%) 7.0 6.8 7.6 7.3

Advances 19,573,396 20,477,790 21,858,769 21,347,737

YoY growth (%) 8.6 12.1 13.0 13.8

Key Ratios


CMP (Rs) 308 308 308 308

EPS (Rs) (7.3) 1.0 12.7 23.5

Book Value (Rs) 218 220 231 251

Adj. BV (70%)(Rs) 122 157 172 199

P/E (x) (42.0) 319.3 24.3 13.1

P/BV (x) 1.4 1.4 1.3 1.2

P/ABV (x) 2.5 2.0 1.8 1.5

DPS (Rs) - - 1.0 3.0

Dividend Payout Ratio (%) - - 7.9 12.8

Dividend Yield (%) - - 0.3 1.0

Efficiency


Cost-Income Ratio (%) 50.2 55.7 55.0 53.2

C-D Ratio (%) 71.5 75.1 78.2 80.9

Business per Emp. (Rs m) 176 198 217 237

Profit per Emp. (Rs lacs) (2) 0 4 8

Business per Branch (Rs m) 2,052 2,294 2,546 2,797

Profit per Branch (Rs m) (3) 0 5 9

Du-Pont


NII 2.39 2.69 2.74 2.87

Total Income 3.82 3.81 3.87 4.01

Operating Expenses 1.91 2.12 2.13 2.13

PPoP 1.90 1.69 1.74 1.88

Total provisions 2.40 1.64 1.26 1.06

RoAA (0.21) 0.03 0.32 0.55

RoAE (3.50) 0.44 5.62 9.74


State Bank of India

August 3, 2019 9

Price Chart Recommendation History

No. Date Rating TP (Rs.) Share Price (Rs.)

1 4-Jul-19 BUY 427 367

2 10-May-19 BUY 427 308

3 5-Apr-19 BUY 361 317

4 1-Feb-19 BUY 361 284

5 7-Jan-19 BUY 355 296

6 6-Nov-18 BUY 355 295

7 5-Oct-18 BUY 349 271

8 11-Aug-18 BUY 349 304

Analyst Coverage Universe

Sr. No. Company Name Rating TP (Rs) Share Price (Rs)

1 Axis Bank Accumulate 766 708

2 Bank of Baroda BUY 146 110

3 Bank of India Reduce 90 95

4 Federal Bank BUY 121 105

5 HDFC BUY 2,700 2,376

6 HDFC Bank BUY 2,700 2,484

7 HDFC Standard Life Insurance Company BUY 585 509

8 ICICI Bank BUY 484 416

9 ICICI Prudential Life Insurance Company BUY 511 383

10 IDFC First Bank BUY 55 45

11 IndusInd Bank BUY 1,800 1,510

12 Jammu & Kashmir Bank BUY 80 41

13 Kotak Mahindra Bank Hold 1,385 1,454

14 Max Financial Services BUY 629 414

15 Punjab National Bank Reduce 75 82

16 SBI Life Insurance Company BUY 906 776

17 South Indian Bank BUY 18 13

18 State Bank of India BUY 427 367

19 Union Bank of India Reduce 71 85

20 YES Bank Hold 101 98

PL’s Recommendation Nomenclature (Absolute Performance)

Buy : > 15%

Accumulate : 5% to 15%

Hold : +5% to -5%

Reduce : -5% to -15%

Sell : < -15%

Not Rated (NR) : No specific call on the stock

Under Review (UR) : Rating likely to change shortly

226

263

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338

375

Au

g -

16

Feb

- 1

7

Au

g -

17

Jan

- 1

8

Jul -

18

Jan

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9

Jul -

19

(Rs)

State Bank of India

August 3, 2019 10

ANALYST CERTIFICATION

(Indian Clients)

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rating: buy | cmp: rs308 | tp:...

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