State Bank of India share price target

June 2019. The credit deposit ratio stood at 75.9% at end June 2019. Bank has also maintained steady CASA deposits ratio of 45.1% at end June 2019. Asset quality stable: Bank has maintained stable the asset quality on sequential, while exhibited healthy improvement on year-on-year basis in Q1FY2020. However, the high...

Asset quality surprised negatively with fresh slippages coming in at | 16212 crore vs. | 7505 crore in Q4FY19, higher than estimates of | 60008000 crore. Corporate slippage was higher at | 5354 crore vs. | 2284 crore QoQ of which | 2014 crore is from one state government entity. Agri and SME also had high slippages. Absolute GNPA saw a slight dip QoQ at | 168493 crore vs. | 172750 crore despite higher slippages as write-offs were also high at | 15490 crore. Consequently, GNPA ratio came in flat QoQ at...

After sustained improvement over FY19, SBIN disappointed on asset quality in 1QFY20. Slower than expected resolution in NCLT cases, a buildup in anticipated stress and deteriorating macros are likely to postpone RoAA improvement (as credit costs rise). Our earnings estimates are highly sensitive to asset resolution outcomes. Nevertheless, the worst is long behind SBIN (in terms of asset quality). SBINs mostly in line operating performance in 1QFY20 was marred by higher than expected slippages. Additional stress and slower resolutions will delay the expected RoAA improvement. Maintain BUY. Our SOTP (1.3x Jun-21E ABV of Rs 228 + Rs 101 sub value) is Rs 398.

State Bank of India (SBI) posted weak results for Q1FY2020, where its topline and operational performance were below expectations; and headline asset quality stood stable in percentage terms and improved marginally in absolute terms sequentially. Net interest income (NII) growth was at a multi-quarter low. However, stable net interest margin (NIM) stood at 2.81% (up 3 BPS q-o-q) due to favourable YOA/COF movement underscores the strength of the franchise. SBI witnessed an overall stable asset quality. GNPA ratio stood stable at 7.53% q-o-q,...

State Bank of India's (SBIN) Q1FY20 PAT of Rs 23bn was in line with our estimate.

At the CMP of Rs. 348.5 the stock is trading at 1.2x FY22

well as over a year earlier level, while reducing NPAs for the fourth straight quarter. The operating profit of the bank has increased at steady pace of 7%, while sequential decline in net profit was on account of higher provisions. Bank has improved Net Interest Margin (NIM) to 2.78% in Q4FY2019, while recording increase in CASA deposits ratio to 45.7% end March 2019. The business growth of the bank...

Decline in fresh slippages and higher coverage put SBIN in better stead vs. a year ago, mostly insulating the P&L from shocks. Nevertheless, our earnings estimates are contingent upon smooth recoveries. Partial visibility on the recovery of three large NLCT a/cs (~Rs 160bn) provides some comfort. A book-accretive fund-raise can be expected in the near term. However, we have not factored it into our estimates. While SBINs profits were hit in 4QFY19 by higher provisions, best-in-class coverage was a positive outcome. A possible fund-raise will be book accretive. Maintain BUY with an SOTP of Rs 383 (1.3x Mar-21E ABV of Rs 222 + Rs 95 sub value).

Asset quality witnessed a significant improvement on the back of contained fresh slippages of | 7505 crore and higher write off & recoveries of | 22976 crore. Corporate slippages came in at | 2284 crore (partial exposure of | 1220 crore of Jet Airways as NPA. Bank exposure to IL&FS; is at | 3487 crore out of which | 1125 crore) has been classified as NPA. Accordingly, absolute GNPA declined sharply to | 172750 crore vs. | 187765 crore QoQ. GNPA...

SBIN reported PAT of INR8.4b (our estimate: INR36.5b) for 4QFY19, dragged by higher provisions of INR165b. NII increased 15% YoY to INR229.5b (in-line), driven by strong loan growth of 13% YoY. Domestic NIM expanded 5bp QoQ to 3.02%. For FY19, NII grew by 18%, while PAT stood at INR8.6b (v/s a loss of INR65.5b in the previous year). Other income grew 1.5% YoY/58% QoQ in a seasonally strong quarter to INR126.8b, driving 10% YoY growth in overall revenues. Opex increased 13% YoY to INR187b, mainly led by wage provisions of INR39.8b (FY19: INR56.4b)....