State Bank of India (SBIN IN)

Rating: BUY | CMP: Rs191 | TP: Rs276

July 31, 2020 Operating performance holding up well as yet

Q1FY21 Result Update Quick Pointers:

☑ Change in Estimates | ☑ Target |  Reco  Moratorium book stood at 9.5% of term loans v/s 25% in May end, with retail &
SME at 4.2%, private corporates at 3.3% and AA & above companies 2.0%.
Change in Estimates
Current
FY22E FY23E
Previous
FY22E FY23E
 Strong beat in NII with growth of 16% YoY as NIMs improve 4bps QoQ to 3.0%
Rating BUY BUY
Target Price 276 254 SBI’s earnings of Rs41.9bn was strong beat on our estimate (PLe: Rs25.8bn)
NII (Rs. m) 11,63,332 12,89,957 11,45,010 12,46,077
on back of very strong NII growth of 16% YoY/17% QoQ which also drew beat
% Chng. 1.6 3.5
Op. Profit (Rs. m) 6,99,696 7,52,994 7,07,635 7,38,608 in core PPOP. Bank’s provisions were slightly higher on Rs52bn towards
% Chng. (1.1) 1.9
EPS (Rs.) 15.2 23.2 20.4 24.6
fraud related a/c & Rs18bn of COVID provisions with total o/s now at Rs30bn.
% Chng. (25.2) (5.5) Moratorium book with less than two EMIs paid came down to sub 10% of term
loans with retail/SME at 4.2% & corporates at 5.3% from 25% in May end.
Key Financials - Standalone Asset quality was comforting but due to moratorium/standstill slippages were
Y/e Mar FY20 FY21E FY22E FY23E lower by 50% QoQ to Rs39bn, although we need to watch out for slippages
NII (Rs bn) 981 1,065 1,163 1,290
once moratorium ends. Adequate capital at this juncture, strong liabilities
Op. Profit (Rs bn) 681 652 700 753
PAT (Rs bn) 145 97 136 207 with pricing power & lower provisions on book should help improve
EPS (Rs.) 16.2 10.8 15.2 23.2 profitability. Retain BUY rating with revised TP of Rs276 (from Rs254) based
Gr. (%) 1,580.3 (33.3) 40.7 52.4
DPS (Rs.) - 2.5 4.0 4.5 on 0.7x (from 0.8x) core Mar-22 ABV & Rs150 for Subs as we increase fair
Yield (%) - 1.3 2.1 2.4 value in cards business.
NIM (%) 2.8 2.8 2.8 2.8
RoAE (%)
RoAA (%)
6.4
0.4
4.1
0.2
5.6
0.3
8.0
0.4
 Strong top line, stake sale & lower opex drive PPOP beat: NII grew by a
P/BV (x) 0.8 0.8 0.8 0.7 strong 16% YoY with couple of factors (i) lower interest reversals with lower
P/ABV (x) 1.1 1.1 1.0 0.9 base (ii) better investment income on growth from credit substitutes (iii) Better
PE (x) 11.8 17.7 12.6 8.2
CAR (%) 13.1 12.5 12.0 11.7 cost of funds despite strong deposits flow. NIMs improved by 4bps QoQ to
3.01% (although calculated NIMs improvement seem much stronger). PPOP
grew 25% YoY on stake sale gains of Rs15bn in SBI Life & strong treasury
Key Data SBI.BO | SBIN IN
gains, while, fee decline was lower and other opex saw higher decline leading
52-W High / Low Rs.351 / Rs.149
Sensex / Nifty 37,607 / 11,073 to beat in PPOP profile by 10% from our estimates.
Market Cap Rs.1,709bn/ $ 22,838m
Shares Outstanding 8,925m
3M Avg. Daily Value Rs.26165.66m  Asset quality improves and has been on expected lines: GNPA/NNPA
were down by 70/40bps QoQ at 5.4%/1.9% respectively with PCR at 67%.
Shareholding Pattern (%) Better NPAs were helped by much lower slippages of Rs39.1bn (down 50%
Promoter’s 57.64 QoQ), while still managed get better recoveries/upgrades of similar amount.
Foreign 7.91 Although, from slippages break Retail/SME had seen higher run-rate, which
Domestic Institution 24.70
Public & Others 9.75 bank mentioned are paying back from Jul’20 onwards. Bank sees slippages
Promoter Pledge (Rs bn) -
could be slightly higher than normalized slippage run rate of 1.5%, while lower
provisions on the legacy loan book but could be marginally offset from COVID
Stock Performance (%) impact provisions. Moratorium book stood at 9.5% with customers paying less
1M 6M 12M
than two EMIs remains a decent tracker of a stress pool formation with largely
Absolute 7.3 (39.9) (42.4)
Relative (0.4) (34.9) (42.6) a secured book. Bank also holds Rs30bn provisions on Rs133.5bn of standstill
loans in various segments.
Pritesh Bumb
[email protected] | 91-22-66322232  Strong liabilities growth; loan growth was better: Overall deposits grew by
Riddhi Mehta a 16% YoY/5.5% QoQ with SA growing at 17% YoY/8% QoQ. Traction remains
[email protected] | 91-22-66322258 strong especially bank has bought rates down by ~100bps on SA & 150bps on
term deposits in last 9 months and should taper off in 2HFY21. On assets side,
loans grew by 8% YoY (better than industry) and along with credit substitutes
growth was at 14% YoY, with retail still holding up at 13% YoY.

July 31, 2020 1

 State Bank of India

Q1FY21 Financials – Strong topline & stake sale help operating

performance
YoY gr. QoQ gr.
Financials (Rs m) Q1FY21 Q1FY20 Q4FY20
(%) (%)
Interest income 6,65,004 6,26,378 6.2 6,26,814 6.1
Interest Expenses 3,98,588 3,96,990 0.4 3,99,145 (0.1)
NII grows well at 16% YoY
Net interest income (NII) 2,66,416 2,29,388 16.1 2,27,669 17.0
- Treasury income 24,853 4,850 412.4 5,057 391.5
Other income 79,575 80,154 (0.7) 1,33,461 (40.4)
Fee income de-growth is much lower
compared to peers especially private Total income 3,45,990 3,09,542 11.8 3,61,130 (4.2)
players Operating expenses 1,80,777 1,77,081 2.1 2,03,793 (11.3)
-Staff expenses 1,18,651 1,09,181 8.7 1,20,387 (1.4)
Other expenses constriction helps
-Other expenses 62,126 67,900 (8.5) 83,406 (25.5)
keep overall Opex under control
Operating profit 1,65,214 1,32,462 24.7 1,57,338 5.0
Provisions to the extent of Rs 16.1bn Core operating profit 1,40,361 1,27,612 10.0 1,52,281 (7.8)
made on wage hike revisions, Rs Total provisions 1,25,013 91,829 36.1 1,34,951 (7.4)
18.4bn for COVID-19 and Rs 52.3bn Profit before tax 40,200 40,632 (1.1) 22,387 79.6
for completely provision on a fraud
Tax 13,704 17,510 (21.7) 13,892 (1.4)
A/c
Profit after tax 26,496 23,122 14.6 8,495 211.9
Stake sale of 2.1% in SBI Life Exceptional Items 15,397 - N/A 27,313 (43.6)
provides Rs15.4bn exceptional gains Adjusted profit 41,893 23,122 81.2 35,808 17.0

Balance Sheet (Rs bn)

Liability franchise continues to do well
Deposits 34,194 29,488 16.0 32,416 5.5
while advances see a better growth
Advances 22,983 21,348 7.7 23,253 (1.2)
sequentially

Ratios (%)

NIMs strengthen on lower cost of RoaA 0.4 0.3 17 0.4 5

deposits and rising share of NIM 3.0 2.8 20 3.0 4
performing loans Yield on Advances 8.4 8.6 (21) 8.7 (37)
Cost of Deposits 4.5 5.1 (59) 4.9 (46)

Asset Quality
Gross NPL (Rs m) 12,96,607 16,84,939 (23.0) 14,90,919 (13.0)
Asset quality sees improvement all
across and PCR also continues it Net NPL (Rs m) 4,27,036 6,56,239 (34.9) 5,18,713 (17.7)
uptrend Gross NPL ratio 5.4 7.5 (209) 6.2 (71)
Net NPL ratio 1.9 3.1 (121) 2.2 (37)
Coverage ratio 67.1 61.1 601 65.2 186

Business & Other Ratios

Low-cost deposit mix 45.3 45.1 24 45.2 18
CASA mix remains more or less
stable Cost-income ratio 52.2 57.2 (496) 56.4 (418)
Non int. inc / total income 23.0 25.9 (290) 37.0 (1,396)
Credit deposit ratio 67.2 72.4 (518) 71.7 (452)
Bank remains well capitalized and
CAR 13.4 12.9 51 13.1 34
clarifies absence of need to raise
equity capital Tier-I 11.4 10.7 70 11.0 35
Source: Company, PL

July 31, 2020 2

 State Bank of India

Q1FY21 Concall Highlights

Business outlook & growth
 Liabilities: Bank performed well on the liability franchise side. Bank believes
increase in deposits can be attributed to: (i) Removal of quarterly balance
charges (ii) Removal of mobile SMS charges. Bank continues to believe that
they will garner higher deposits if they continue to provide an affordable
banking service

 Assets: Loan growth for FY21 is expected to come in around 8% as opposed

to the 10% guided earlier. Bank has a comfortable project loans pipeline of
Rs1trn. Management sees a u-curve in Retail and MSME though cautions that
these are early signs and Bank would wait another quarter before calling it a
trend and also emphasizes that it needs to watch SME segment closely for
loan quality. Under GECL, Bank has sanctioned Rs210bn of which Rs150bn
has been disbursed Home loan, Auto Loans and Personal loan sanction and
disbursement trends have also been picking up as shown in Exhibit 4 &
Exhibit 5. Bank is not looking at any changes in loan contracts for existing
retail loans.

 Moratorium: 9.5% of the Bank’s term loan book having paid less than 2
installments was classified under moratorium. For the 1Q21, Bank has
maintained classification of non-morat loans as those who have paid at least 2
out of the 4EMIs going ahead which will be 2 out of 3. The morat book consists
of 2% from AA and AAA rated Pvt Corporates, 3.3% from Pvt. Sector
Corporates and 4.2% (of which 2% from housing) from Retail & SME
segments. Bank’s SMA book as on 01.03.20 was Rs420bn out of which
Rs130bn have seen less than 2 instalment payments. Bank expects corporate
accounts to repay normally Sept’20 onwards and only a very small portion of
the Retail customers have paid less than 2 instalments. Bank specifies that it
doesn’t need morat beyond the current timeline of 31.08.20.

Opex/Margins/Treasury
 NIMs benefitted from (i) well managed cost of deposits (ii) increasing share of
performing loans and (iii) absence of interest reversals.

 Decline in Bank’s fee income was lesser than the same for it’s peers especially
the private players. Bank maintains that it is asymptomatic of COVID related
losses as on 1Q21

Asset Quality
 Slippages fell to Rs 39.1bn in 1Q21 and Bank expects the same to be limited
to Rs32bn-Rs36bn per quarter for FY21. Slippages in Retail book came from
borrowers who were not eligible under morat but wrongly assumed so for which
huge pullback in July’20 has been seen.

 Provisions: Bank’s legacy provisions have now almost been completed. Fairly
good amount of excess provisions held give a good cushion w.r.t. to any
unanticipated slippages. Base case credit costs for FY21 are expected at
1.5%-1.6%. Bank has already provided fully for fraud a/c (Rs35bn accelerated
provisioning in 1Q21, instead of availing dispensation of splitting it over 4-
quarters. In 1Q21, bank has provided Rs16.14bn w.r.t. wage revision and till
FY22 expects Rs40bn-Rs50bn ageing provisions every quarter

July 31, 2020 3

 State Bank of India

 On the Recoveries front, by 3Q21, Bank expects Rs100bn-Rs110bn

especially from the recently classified fraud account.

Others

 Capital- Bank doesn’t see any immediate need for any capital raise

 Bank has no plan now to sell more stake in non-core assets

Breakup of COVID Provisions

Segment (Rs mn) SMA Principal O/S Provisioning @ 15%
Home & Home Related 69,420 10,410
Personal 24,540 3,680
SME 26,070 3,910
Other Corporates 13,460 2,020
Int. accrues in 1Q21 and unrealized interest n/a 5,100
Prov. for CC/OD n/a 1,610
Prov. for Agri n/a 3,000
Source: Company, PL

Advances growth improves sequentially though remains low

Advances growth YoY(%)

14%
13%13% 12%13%
11% 11%
10%
9%
7% 7% 7% 8%
7% 6%
4% 4% 4%
0% 0% 1%
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18

3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q18
3Q18
4Q18
1Q19
2Q19

Source: Company, PL

YoY growth trends in Sanctions across segments YoY growth trends in Disb. across segments

Mar-20 Apr-20 May-20 Jun-20 Mar-20 Apr-20 May-20 Jun-20

37% 41%

8% 7% 8%
0%

-10% -9%
-29% -26% -23%
-32%
-53% -54% -55% -53%
-72% -73% -72% -72%
-91% -87%
-99% -99%
Home Loans Auto Loans Personal Loans Home Loans Auto Loans Personal Loans

Source: Company, PL Source: Company, PL

July 31, 2020 4

 State Bank of India

Retail and International book drive growth, Corporate book

sequentially de-grows
Loan break up (Rs bn) Q1FY21 Q1FY20 YoY gr. (%) Q4FY20 QoQ gr. (%)
Gross Advances 23,856 22,383 6.6 24,228 (1.5)
Large Corporates 8,093 7,826 3.4 8,442 (4.1)
SME 2,787 2,812 (0.9) 2,676 4.1
Agri 2,043 2,011 1.6 2,061 (0.9)
International 3,445 3,099 11.2 3,574 (3.6)
Retail 7,488 6,636 12.8 7,476 0.2
Home 4,554 4,114 10.7 4,559 (0.1)
Auto 702 717 (2.2) 727 (3.5)
Other Retail 2,232 1,805 23.7 2,191 1.9
Source: Company, PL

Corporate Rating Profile of Advances shows BB & Below book

mostly stable YoY while AAA book drops whereas AA book gains traction

4Q19 1Q20 4Q20 1Q21

39%
36%
34%
33%
30%
25% 26%
24%

17%
16%
14% 14% 15%
11% 11% 12% 13%
10% 10%
10%

AAA AA A BBB BB & Below

Source: PL, Company

NIMs perform on better cost management

NIM (%) Domestic NIM (%)

3.9%

3.6%

3.3%

3.0%

2.7%

2.4%

2.1%
4Q16
1Q17
2Q17

4Q17
1Q18
2Q18

4Q18
1Q19
2Q19

1Q20
2Q20

1Q21
3Q16

3Q17

3Q18

3Q19
4Q19

3Q20
4Q20

Source: Company, PL

July 31, 2020 5

 State Bank of India

Core fee de-grows in hostile environment CASA ratio remains more or less stable

Core fees growth YoY Low Cost deposits(%)

70%
47%
60%
50% 46%
40% 45%
30% 44%
20%
43%
10%
42%
0%
-10% 41%
-20% 40%
3Q16
4Q16
1Q17

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

2Q20
3Q20
4Q20
1Q21
2Q17

1Q20

3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
Source: Company, PL Source: Company, PL

Overall Asset Quality improvement continues… …aided by lower gross slippages

Gross NPA (%) Net NPA (%) Gross Slippages (%), annualized
12% 8%
7%
10%
6%
8% 5%
6% 4%
3%
4%
2%
2% 1%
0% 0%
1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20

1Q21
4Q20

Source: Company, PL Source: Company, PLz

Segment wise Slippages Mix- Corporate & Agri slippages come

off while Retail slippages see a sequential spike

Corporate SME Agri Retail Intnl

100.0% 1.3% 3.6% 5.9%

7.4% 10.3%
90.0% 15.0% 7.4% 17.5%
5.0%
80.0%
17.9%
70.0% 26.1% 35.0%
9.5% 36.6%
60.0%
64.6%
50.0%
24.5% 17.3%
40.0% 12.9%
30.0% 57.3%
20.0% 36.8% 2.8% 27.2%
33.0%
10.0% 19.3%
0.0% 5.9%
1Q20 2Q20 3Q20 4Q20 1Q21

Source: Company, PL

July 31, 2020 6

 State Bank of India

Slippages lower significantly, getting benefit from moratorium on standstill accounts

(Rs mn) 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
Additions 2,67,800 3,28,210 1,43,490 1,08,880 65,410 79,610 1,69,950 91,260 2,00,980 82,910 39,100
Slippages (%) - annualized 5.94% 7.19% 2.97% 2.32% 1.34% 1.56% 3.11% 1.71% 3.75% 1.51% 0.67%
Upgradation + Recovery 22,310 - 1,48,560 43,270 66,170 57,120 57,690 39,310 1,35,530 25,280 36,080
Write offs 93,120 80,000 1,00,800 1,35,380 1,80,240 1,72,640 1,54,820 1,20,530 85,200 1,63,320 1,97,330
Gross NPAs 19,91,400 22,34,260 21,28,390 20,58,620 18,77,620 17,27,470 16,84,910 16,58,890 17,07,720 16,21,780 12,96,580
Gross NPA Ratio 10.35% 10.91% 10.70% 9.95% 8.71% 7.53% 7.53% 7.19% 6.94% 6.15% 5.44%
Net NPAs 10,23,701 11,08,547 9,92,363 9,48,100 8,09,435 6,58,947 6,56,239 5,99,392 5,22,486 5,18,713 4,27,036
Net NPA Ratio 5.61% 5.73% 5.29% 4.84% 3.95% 3.01% 3.07% 2.79% 2.65% 2.23% 1.86%
Provision Coverage Ratio 48.6% 50.4% 53.4% 53.9% 56.9% 61.9% 61.1% 62.9% 67.3% 65.2% 67.1%
SMA 1 & SMA 2 31,870 23,440 12,320 1,70,590 77,620 1,02,890 1,83,130 81,010 72,660 17,500
% of loans 0.18% 0.14% 0.07% 0.91% 0.39% 0.53% 0.95% 0.41% 0.35% 0.09%
Under Resolution Framework
Standard 1,91,420 1,68,220 87,110
% of Loans 0.99% 0.87% 0.44%
NPA 2,91,360 2,65,360 2,18,550
Net Stressed assets (% of loans) 5.61% 5.89% 5.42% 4.91% 4.79% 3.37% 3.56% 3.65% 2.74% 2.54% 1.93%
Source: Company, PL

Provisioning requirements to effect recovery in Return Ratios

RoAE decomposition (%) FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E
Net interest income 2.9 2.6 2.7 2.2 2.5 2.6 2.6 2.5
Treasury income 0.3 0.3 0.6 0.4 0.1 0.3 0.2 0.2
Other Inc. from operations 0.9 1.0 0.9 0.9 0.9 0.9 0.7 0.7
Total income 4.0 3.9 4.2 3.5 3.5 3.8 3.5 3.5
Employee expenses 1.2 1.1 1.2 1.0 1.2 1.2 1.2 1.2
Other operating expenses 0.8 0.8 0.9 0.8 0.8 0.8 0.7 0.7
Operating profit 2.0 2.0 2.1 1.8 1.6 1.8 1.6 1.5
Tax 0.3 0.2 0.0 (0.3) 0.0 0.3 0.1 0.1
Loan loss provisions 1.0 1.3 2.1 2.2 1.5 1.1 1.3 1.1
RoAA 0.7 0.5 (0.1) (0.2) 0.0 0.4 0.2 0.3
RoAE 10.6 7.3 (1.1) (3.5) 0.4 7.2 4.6 6.2
Source: Company Data, PL Research

Change in earnings estimates – We adjust for higher NII, stake

sale gains and better opex
Old Revised % change
Rs (mn)
FY21E FY22E FY21E FY22E FY21E FY22E
Net interest income 10,25,818 11,07,411 10,64,756 11,63,332 3.8 5.0
Operating profit 6,27,280 6,70,035 6,51,844 6,99,696 3.9 4.4
Net profit 77,367 1,52,681 96,578 1,35,904 24.8 (11.0)
Loan Growth (%) 6.4 7.3 6.6 8.1 0.2 0.8
Credit Cost (bps) 220 180 220 200 - 20.0
EPS, Rs. 8.7 17.1 10.8 15.2 24.8 (11.0)
ABVPS, Rs. 175 185 179 184 2.0 (0.3)
Price target, Rs. 254 276 8.7
Recommendation BUY BUY

Source: Company, PL

July 31, 2020 7

 State Bank of India

We revise our TP to Rs276 (from Rs254) based on 0.7x Mar-22

ABV & SOTP
PT calculation and upside
Terminal growth 5.0%
Market risk premium 7.3%
Risk-free rate 6.5%
Adjusted beta 1.08
Cost of equity 14.3%

Fair price - P/ABV 124

Value of subs/associates 152
Fair value of consol. entity 276
P/ABV – Standalone bank 0.7
P/E - Standalone bank 8.1
Current price, Rs 191
Upside (%) 44%
Dividend Yield (%) 2%
Total Return 46%
Source: Company, PL

SBIN’s SOTP valuation table

SOTP valuation, FY20 Stake (%) Revised PT Method
Standalone 100% 124 0.7x Mar-22 P/ABV
SBI Life Insurance 56% 49 2.4x EV & 20.8x New Biz multiple
Asset management 63% 19 5% of AUMs
Cards 70% 53 P/E model
Others 100% 30 P/E model
Total 276
Source: Company, PL

SBIN - one year forward P/ABV trends

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

2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
0.8
Jan-16

Jan-17

Jan-19

Jan-20
Jan-15

Jan-18
Jul-14

Jul-16

Jul-17

Jul-20
Oct-14

Apr-15
Jul-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Jul-18

Jul-19
Oct-19

Apr-20
Oct-15

Oct-18

Apr-19

Source: Company, PL

July 31, 2020 8

 State Bank of India
Income Statement (Rs. m) Quarterly Financials (Rs. m)
Y/e Mar FY20 FY21E FY22E FY23E Y/e Mar Q2FY20 Q3FY20 Q4FY20 Q1FY21
Int. Earned from Adv. 17,97,488 18,56,162 19,56,286 21,08,075 Interest Income 6,43,124 6,76,920 6,26,814 6,65,004
Int. Earned from invt. 6,82,047 7,63,748 8,90,892 10,22,608 Interest Expenses 3,97,121 3,99,132 3,99,145 3,98,588
Others 64,496 97,412 88,628 77,018 Net Interest Income 2,46,003 2,77,788 2,27,669 2,66,416
Total Interest Income 25,73,236 27,44,923 29,63,287 32,36,460 YoY growth (%) 17.7 22.4 (0.8) 16.1
Interest Expenses 15,92,388 16,80,168 17,99,955 19,46,503 CEB 50,400 56,350 78,730 44,710
Net Interest Income 9,80,848 10,64,756 11,63,332 12,89,957 Treasury - - - -
Growth(%) 14.5 2.1 8.1 8.8 Non Interest Income 85,384 91,059 1,33,461 79,575
Non Interest Income 4,52,215 3,97,949 4,17,846 4,30,382 Total Income 7,28,508 7,67,979 7,60,275 7,44,579
Net Total Income 14,33,063 14,62,705 15,81,179 17,20,339 Employee Expenses 1,13,026 1,14,556 1,20,387 1,18,651
Growth(%) 8.2 3.9 7.6 8.5 Other expenses 71,217 72,065 83,406 62,126
Employee Expenses 4,57,150 5,07,436 5,58,180 6,19,580 Operating Expenses 1,84,243 1,86,622 2,03,793 1,80,777
Other Expenses 2,61,549 2,69,396 2,88,253 3,11,314 Operating Profit 1,47,145 1,82,226 1,57,338 1,65,214
Operating Expenses 7,51,737 8,10,861 8,81,483 9,67,345 YoY growth (%) 5.8 44.3 (7.1) 24.7
Operating Profit 6,81,326 6,51,844 6,99,696 7,52,994 Core Operating Profits - - - -
Growth(%) 22.9 (4.3) 7.3 7.6 NPA Provision 1,10,410 81,931 1,18,940 94,205
NPA Provision 4,29,975 5,26,911 5,11,447 4,68,461 Others Provisions 1,31,389 72,529 1,34,951 1,25,013
Total Provisions 4,30,698 5,22,781 5,18,079 4,76,163 Total Provisions 1,31,389 72,529 1,34,951 1,25,013
PBT 2,50,628 1,29,063 1,81,616 2,76,831 Profit Before Tax 15,755 1,09,697 22,387 40,200
Tax Provision 1,05,747 32,485 45,713 69,678 Tax 20,481 53,863 13,892 13,704
Effective tax rate (%) 42.2 25.2 25.2 25.2 PAT (4,726) 55,834 8,495 26,496
PAT 1,44,881 96,578 1,35,904 2,07,153 YoY growth (%) (150.0) 41.2 1.3 14.6
Growth(%) 1,580.3 (33.3) 40.7 52.4 Deposits 3,03,33,958 3,11,12,286 3,24,16,207 3,41,93,628
YoY growth (%) 8.0 9.9 11.3 16.0
Balance Sheet (Rs. m)
Advances 2,14,61,598 2,19,99,169 2,32,52,896 2,29,83,462
Y/e Mar FY20 FY21E FY22E FY23E
YoY growth (%) 9.6 7.4 6.4 7.7
Face value 1 1 1 1
No. of equity shares 8,925 8,925 8,925 8,925 Key Ratios

Equity 8,925 8,925 8,925 8,925 Y/e Mar FY20 FY21E FY22E FY23E
Networth 23,20,074 23,94,340 24,94,545 26,61,537 CMP (Rs) 191 191 191 191
Growth(%) 5.0 3.2 4.2 6.7 EPS (Rs) 16.2 10.8 15.2 23.2
Adj. Networth to NNPAs 5,18,713 5,32,880 6,01,836 5,96,193 Book Value (Rs) 233 242 253 272
Deposits 3,24,16,207 3,66,30,314 4,02,93,346 4,43,22,680 Adj. BV (70%)(Rs) 175 179 184 203
Growth(%) 11.3 13.0 10.0 10.0 P/E (x) 11.8 17.7 12.6 8.2
CASA Deposits 1,43,37,076 1,63,00,490 1,80,91,712 1,99,45,206 P/BV (x) 0.8 0.8 0.8 0.7
% of total deposits 44.2 44.5 44.9 45.0 P/ABV (x) 1.1 1.1 1.0 0.9
Total Liabilities 3,95,13,939 4,36,09,981 4,76,58,183 5,21,99,990 DPS (Rs) - 2.5 4.0 4.5
Net Advances 2,32,52,896 2,46,48,069 2,64,96,675 2,86,16,409 Dividend Payout Ratio (%) - 23.1 26.3 19.4
Growth(%) 6.4 6.0 7.5 8.0 Dividend Yield (%) - 1.3 2.1 2.4
Investments 1,04,69,545 1,25,25,042 1,46,63,093 1,64,87,989
Efficiency
Total Assets 3,95,13,939 4,36,09,981 4,76,58,183 5,21,99,990
Y/e Mar FY20 FY21E FY22E FY23E
Growth (%) 7.3 10.4 9.3 9.5
Cost-Income Ratio (%) 52.5 55.4 55.7 56.2
Asset Quality C-D Ratio (%) 71.7 67.3 65.8 64.6
Y/e Mar FY20 FY21E FY22E FY23E Business per Emp. (Rs m) 223 243 262 284
Gross NPAs (Rs m) 14,90,919 15,94,504 18,35,187 18,53,999 Profit per Emp. (Rs lacs) 6 4 5 8
Net NPAs (Rs m) 5,18,713 5,32,880 6,01,836 5,96,193 Business per Branch (Rs m) 2,493 2,760 2,995 3,256
Gr. NPAs to Gross Adv.(%) 6.2 6.2 6.6 6.2 Profit per Branch (Rs m) 6 4 6 9
Net NPAs to Net Adv. (%) 2.2 2.2 2.3 2.1
Du-Pont
NPA Coverage % 65.2 66.6 67.2 67.8
Y/e Mar FY20 FY21E FY22E FY23E
Profitability (%) NII 2.80 2.79 2.77 2.81
Y/e Mar FY20 FY21E FY22E FY23E Total Income 4.10 3.83 3.77 3.74
NIM 2.8 2.8 2.8 2.8 Operating Expenses 2.15 2.12 2.10 2.10
RoAA 0.4 0.2 0.3 0.4 PPoP 1.95 1.71 1.67 1.64
RoAE 6.4 4.1 5.6 8.0 Total provisions 1.23 1.37 1.23 1.04
Tier I 11.0 10.6 10.3 10.1 RoAA 0.41 0.25 0.32 0.45
CRAR 13.1 12.5 12.0 11.7 RoAE 7.16 4.56 6.16 8.85
Source: Company Data, PL Research Source: Company Data, PL Research

July 31, 2020 9

 State Bank of India

Price Chart Recommendation History

(Rs)
No. Date Rating TP (Rs.) Share Price (Rs.)
375
1 08-Jul-20 BUY 254 192

319 2 06-Jun-20 BUY 254 188

3 14-Apr-20 BUY 317 184
263
4 31-Jan-20 BUY 419 318
207 5 03-Jan-20 BUY 413 334
6 30-Oct-19 BUY 413 290
151
Jul - 18

Jul - 19

Jul - 20
Aug - 17

Jan - 18

Jan - 19

Jan - 20
7 25-Oct-19 BUY 396 282
8 03-Oct-19 BUY 388 254
9 03-Aug-19 BUY 369 308

Analyst Coverage Universe

Sr. No. Company Name Rating TP (Rs) Share Price (Rs)
1 Axis Bank Hold 480 446
2 Bank of Baroda BUY 83 53
3 Federal Bank BUY 67 50
4 HDFC Bank BUY 1,265 1,098
5 HDFC Life Insurance Company Reduce 522 627
6 ICICI Bank BUY 462 383
7 ICICI Prudential Life Insurance Company Reduce 402 443
8 IDFC First Bank Sell 21 28
9 IndusInd Bank BUY 680 527
10 Kotak Mahindra Bank Accumulate 1,389 1,323
11 Max Financial Services Hold 545 563
12 Punjab National Bank BUY 40 37
13 SBI Life Insurance Company Hold 880 888
14 South Indian Bank BUY 11 8
15 State Bank of India BUY 254 192

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

July 31, 2020 10

 State Bank of India

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