State Bank of India share price target

losses and instead provided it in one quarter. The bank has posted strong growth in the net interest income, while showing improvement in NIM to eight quarter high level in Q1FY2019. The bank has improved the asset quality in...

ICICI Securities Ltd | Retail Equity Research SBI reported a loss of | 48.7 billion, led by higher provision from investment depreciation, higher wage opex and NPA provisions Gross slippages remained elevated at | 14349 crore vs. | 33670 crore, higher than expected. Out of this, corporate slippages were | 3704 crore (| 3386 crore from watchlist). About | 9984 crore was fresh slippages. Depicting a recovery from steel accounts in NCLT 1 of | 15000 crore, GNPA ratio declined 22 bps QoQ to 10.69% while NNPA...

Maintain BUY with SOTP of Rs 340 (1.3x Mar-20E core ABV of Rs 170 + Rs 119 subs value). Though SBIN reported a 3rd consecutive quarterly loss, the improvement in business metrics was heartening. NII (+9% QoQ) was ahead of estimates as NIMs saw a sharp uptick (2.80%, up 30bps). Asset quality actually improved (G/NNPAs down ~5/11% QoQ) as stress accretion eased (slippages at ~3% ann. vs. ~7% QoQ) and 2 NCLT resolutions materialized. Despite the humongous base of 44%+, sequential SA growth of 3% indicates strong liability franchise. The 3% sequential dip in loan book was seasonal.

12 August 2018 largely driven by the complete absorption of MTM losses, as it made investment depreciation provisions of INR71b. Asset quality improved, aided by moderation in fresh slippages and resolution of two NCLT cases. The size of watch-list including SMA-1 & 2, thus, declined to INR246.3b (1.3% of loans; INR289.9b in 4QFY18). aided by asset recovery of INR19.3b via interest income, even as the loan portfolio declined 3% QoQ (~12% QoQ decline in overseas portfolio). Core PPoP grew 12% YoY to INR113b, while the margin improved 44bp YoY to 2.8%. of 14% YoY, while the corporate/mid-corporate segment reported a sequential decline. Management guided for 12% loan CAGR till FY20E. as SBIN recognized INR9.02b of gratuity liability (pending INR18.05b to be provided by 3QFY19) and also made wage provisions of ~INR10b.

SBIN reported loss of Rs48.8bn as bank opted to recognize entire MTM loss of Rs58.9bn on its investment book over amortizing it over 3 quarters. However the bank did amortize provision for gratuity with balance liability of Rs27bn to be spread over next 2 quarters. Domestic loan growth stable at ~7.2% yoy to Rs17.2tn with share of pure retail (mainly mortgages) rising to ~28% against 26% last year. With 11 PSU banks under PCA, SBI...

State Bank of India reported quarterly result below market estimates State Bank of India on standalone basis for merged entity has recorded net loss for second straight quarter at Rs 7718.17 crore for the quarter ended March 2018 (Q4FY2018). The higher slippages of loans and consistent high provision for bad debt and investment depreciation along with dip in treasury income caused the bank to record net losses for Q4FY2018. As per the figures shared by the bank in its presentation on quarterly results for merged standalone bank, the bank has exhibited 5% dip in net interest income, but the bank has continued to improve net interest margin (NIM) on sequential basis for third straight quarter to...

Maintain BUY. Our SOTP is Rs 328 (1.3x Mar-20E core ABV of Rs 175 + Rs 100 subs value). SBIN posted a second consecutive quarterly loss in 4QFY18 (Rs 77.2bn), driven by NPA provisioning (+36% QoQ to ~Rs 241bn). Asset quality worsened as fresh slippages shot up to ~7.2% in line with the RBI circular mandating accelerated recognition. The decision to take MTM provisions at one go added to the pressure. An uptick in loan growth (+6% QoQ), steady NIMs (2.50%), the seasonal spike in fee income and controlled opex (+4% YoY, despite additional gratuity ~Rs 9bn) drove sequential PPoP growth.

ICICI Securities Ltd | Retail Equity Research Gross slippages increased to | 33670 crore vs. | 25836 crore in Q3FY18. Out of this, corporate slippages were | 29037 crore comprising | 17435 crore from restructured book (mainly from power sector at | 10569 crore) and balance | 11609 as fresh slippages including | 6684 crore from slippage of telecom account and | 4196 crore from iron & steel sector. Absolute GNPA was at | 223427 crore with 56 bps QoQ increase in GNPA ratio at 10.91%...

Asset Quality Stress Peaking Out: Maintain BUY State Bank of India (SBI) has reported the highest ever fresh slippages of Rs337bn (+30.3% QoQ & 34.4% YoY) in 4QFY18 led by accelerated NPA recognition of Rs174.4bn from loans under different restructuring schemes of the RBI. However, its overall stressed asset ratio including gross NPA and other standard stressed loans reduced to 12.2% in Mar'18 compared to 12.7% in Dec'17 and 14.5% in Jun'17. Further, the Bank's PCR including Advance Under Collection Account (AUCA) improved to 66.2%, while ~63% PCR on all accounts referred to NCLT by the RBI. This will give much-needed support to future credit cost trajectory, in our view. Further, sharp...

SBIN's 4QFY18 loss of INR 77.2bn marks large cleanup of balance sheet with a) Non-NPL stressed loans declining to just 1.9% of loans, b) 180 bps increase in provision cover on a QoQ basis to 50.4%. Moreover, management has indicated that this new watchlist subsumes all ex-NPL stress on the loan book, and includes all corporate SMA2 loans as well as some SMA1 loans. This should provide comfort on the expected decline in slippages for FY19. We continue to build INR 549bn of credit cost over FY19E, of which 74% is routed through P&L; and the rest through direct haircuts on book value (Exhibit 6). Although management guides for RoA of 0.9%-1% by FY20E, we conservatively build RoA of 0.75% by FY20E. We believe...