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State Bank of India (SBI) | Q3FY13 Result Update




IndiaNivesh Securities Pvt Ltd


15 Feb 2013





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State Bank of India (SBI) | Q3FY13 Result Update Performance in-line with expectations, continued disappointment on asset quality…Maintain HOLD with price target of Rs 2360… Loan growth was up 16.1% y-o-y aided by healthy growth seen across large corporate, SME and International loan book. Deposits grew 15.6% y-o-y, CASA ratio falls to 45.5%. Net Interest Income (NII) registered negative growth of 3.2% to Rs 111.5 bn (vs. Rs 115.1 bn in Q3FY12). NIMs declined by 44 bps y-o-y and 5 bps sequentially to 3.40%. Asset quality continues to remain a major concern for the bank as GNPA increased by 15 bps sequentially & 69 bps y-o-y, respectively. Fresh slippages were Rs 81.7 bn vs. 71.0 bn in Q2FY13, lower cash recoveries were seen at Rs 9.5 bn vs. Rs 14.2 bn in Q2FY13. Valuation: SBI’s performance has been broadly in-line with expectations on the operating front. However, on the asset quality front, mainly higher restructuring surprised us. Though fresh slippages were in-line with expectations, recoveries and up-gradations were higher than what was anticipated. Also, lower loan loss provisioning worries us a bit as there exists a possibility for it to go up in Q4FY13, too. NIMs were broadly stable at 3.4% levels, but we expect it to improve going forward on a/c of some more liquidity to be deployed in Q4FY13E. At CMP of Rs 2,233, based on street estimates, the stock is trading at consolidated FY13E and FY14E, P/ABV of 1.33x & 1.15x, respectively. We maintain HOLD rating on the stock with price target of Rs 2,360, implying 1.22x FY14E P/ABV multiple (on consolidated basis).

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