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11 February 2016 3QFY16 Results Update | Sector: Financials

State Bank of India

Alpesh Mehta ([email protected]); +91 22 3982 5415 Dhaval Gada ([email protected]); +91 22 3982 5505

BSE SENSEX S&P CNX CMP: INR154 TP: INR215 (+39%) Buy 22,952 6,976 Bloomberg SBIN IN Equity Shares (m) 7,762.7 M.Cap.(INR b)/(USD b) 1197/17.5 52-Week Range (INR) 316 / 152 1, 6, 12 Rel. Per (%) -17/-24/-27 Avg Val, INR m 4339 Free float (%) 39.8

Financials & Valuation (INR b) Y/E Mar 2016E 2017E 2018E NII 554 625 702 OP 395 448 508 NP 114 145 175 NIM (%) 2.8 2.8 2.8 EPS (INR) 18.7 23.8 28.4 EPS Gr. (%) -18.0 27.5 19.3 BV/Sh. INR* 225 244 268 ABV/Sh. INR* 167 192 225 RoE (%) 8.7 10.0 11.1 RoA (%) 0.5 0.6 0.6 Valuations P/E(X)* 7.7 6.1 5.1 P/BV (X)* 0.64 0.58 0.53 Div. Yield (%) 2.0 2.5 3.0 *Consolidated

Weak earnings; RBI asset quality review dents performance; Cut earnings by ~25% SBIN’s 3QFY16 PAT was INR11.2b (-62% YoY, 60% miss), led by weak core PPoP

growth (-6% YoY) and high credit costs (2.2% v/s 1.2% 2Q) – 56% related to RBIasset quality review (AQR).

Led by AQR, NNPA increased ~75bp QoQ however, relapse from RL (partially ledby AQR) led to OSRL declining by 50bp QoQ hence overall net stress loans (ex5:25 and SDR) increased by ~50bp QoQ (amongst the lowest in PSU banks)

Gross slippages were INR207b (6.7% of loans, annualized) v/s INR58.8b (1.9%) in2QFY16. 70%+ of slippages during the quarter were led by AQR; adjustedslippages (INR59b) were stable QoQ. Management expects similar level of stressto persist in 4Q. Fresh restructured loans were INR13b (0.4%) and 5:25refinancing during 3Q was INR5.1b (v/s INR39.6b in 2Q). SBIN invoked SDR on17 accounts amounting to ~INR165b. Total stock of refinanced loans and SDRnow stands at INR334.4b (2.4% of loans, of which 1.7% is standard).

Reported NIM were down 26bp QoQ (2.77%) partly led by higher slippages(~10bp impact) and base rate cut (35bp cut in Oct-15). Overall NII de-grew by1% YoY (-4.5% QoQ). Fee growth continues to remain moderate (+7% YoY).

Other highlights: (a) AQR related slippages for SBI Group are expected to be~INR470b (2.6% of loans) – Part of which would come from Restructured loansor 5:25 or SDR accounts; (b) CET1 ratio (standalone) now stands at 9.6%.

Valuation and view: We like SBIN for its lowest NSL at 6.4%, relatively betterPCR of 65%, healthy capitalization (consol. CET1 of 9.4%), strong liabilityfranchise (retail deposits of >95%) and focus on core operating profitability.However, we expect asset quality/credit cost pressures to persist over next 4-6quarters. Hence, we cut earnings estimate by ~25 for FY17/18E. SBIN is highlygeared with the economic upcycle, improvement in asset quality andprofitability is likely to be the highest due to its policy of recognizing stressupfront and lumpy exposures. Buy with a target price of INR215 (0.8x FY17Econsol. BV + INR13 for insurance).

Investors are advised to refer through disclosures made at the end of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

11 February 2016 2

State Bank of India

Exhibit 1: Quarterly Performance Y/E March 3QFY16A 3QFY16E Var. (%) Comments Net Interest Income 136,065 141,501 -4 NIMs below expectation led by higher slippages % Change (YoY) -1.2 2.7

Other Income 61,775 56,604 9 Led by higher than expected non-core income

Net Income 197,840 198,106 0 Operating Expenses 101,861 104,603 -3 Lower than expected growth in staff expenses Operating Profit 95,979 93,503 3 % Change (YoY) 3 1

Other Provisions 79,494 50,531 57 Credit costs significantly higher than expected

Profit before Tax 16,485 42,972 -62Tax Provisions 5,332 14,610 -64Net Profit 11,153 28,361 -61 Weak core PPoP growth (-6% YoY) and higher credit costs lead to

significant PAT miss % Change (YoY) 25 6 Source: MOSL, Company

Strong growth in large corporate/retail Domestic loans grew by 5% QoQ led by strong uptick in large corporate growth

(+6% QoQ, +21% YoY) and continued traction on retail (+6% QoQ, +18% YoY). International loans were flat QoQ (+18% YoY). International loans now form

18.6% of overall loans. Mid-corporate loans grew by 4% QoQ (+2% YoY) – positive YoY growth after six

quarters. Continued traction on retail loan growth was driven by healthy growth in home

loans (+18% YoY and +5% QoQ), personal loans (+23% YoY and +8% QoQ) andauto loans (+21% YoY and +9% QoQ).

Other highlights NIMs declined ~25bp QoQ led by a) Cut in Base Rate by 40bp in 3QFY16 (b)

interest reversals on slippages (INR4.54b, 10bp) and c) growth in relativelyhigher rated corporates

Core fee growth was muted at -6% YoY vs. 4% YoY in 2QFY16. On consolidated basis, CET 1 stood at 9.38% and overall Tier 1 stood at 9.55%.

Strong retail loan growth continues (18% YoY) – share

rises to 21.6% - eight year high

11 February 2016 3

State Bank of India

Exhibit 2: Asset quality performance during the quarter (INR b) Asset quality (INR b) 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 QoQ (%) YoY (%) GNPA 678 616 604 607 620 567 564 568 728 28.1 17.4 NNPA 372 311 319 330 345 276 287 286 402 40.8 16.8 GNPA (%) 5.7 5.0 4.9 4.9 4.9 4.3 4.3 4.2 5.1 95 bps 20 bps NNPA (%) 3.2 2.6 2.7 2.7 2.8 2.1 2.2 2.1 2.9 75 bps 9 bps PCR (Cal,%) 45 50 47 46 44 51 49 50 45 -499 bps 31 bpsPCR (Rep, %) 58 63 63 63 64 69 69 70 65 -525 bps 167 bpsOther details Slippages 114 79 99 77 70 48 73 59 207 252.2 193.8 Up gradation & Recoveries 28 84 45 26 13 52 27 15 10 -31.8 -18.1Net slippages 87 -5 54 51 58 -4 46 44 197 351.4 240.2 Restructured loans OSLR (as restated) 394 431 422 440 465 558 560 535 486 -9.1 4.4 Net addition in the quarter 2 36 -8 17 26 93 1 -25 -49 NM NM OSRL (%) 3.4 3.6 3.5 3.6 3.8 4.3 4.4 4.0 3.5 -50 bps -28 bpsNSL (NNPA+OSRL) Net stress loans 766 741 741 770 810 834 846 820 888 8.3 9.7 NSL (%) 6.7 6.1 6.2 6.4 6.6 6.4 6.6 6.1 6.4 25 bps -19 bpsNSL/NW (%, Post tax) 49 44 43 43 44 45 44 39 42 (NNPA+25% OSRL)/NW (%, Post tax) 43 38 37 37 38 38 36 33 37 Net slippages+ Add to RL 89 32 46 68 84 89 47 19 148 699.1 77.1 Net stress addition (Post Prov.) 53 -24 0 28 41 24 12 -26 68 NM 67.9

OSLR: Outstanding Restructured loans, NSL (net stress loans), All figures in INR b unless otherwise stated Source: MOSL, Company

Analyst meet highlights

NIMs decline led by a) Cut in Base Rate by 70bp and b) Interest reversals onslippages (INR4.5b)

Capital raising plans a) Raising T2 bonds of INR60b in 4Q b) Approval of CET1capital raise of INR150b c) Divestment of non-core assets (INR10b post tax) d)Unlocking of value of subsidiaries (FY17, 10-12b post tax) e) unlocking of valueof Real Estate (INR200b+, RBI may allow revaluation reserve as a part of T1capital) f) Repatriation of profits from overseas branches (INR7-8b)

RBI AQR related slippages are INR145-150b (similar quantum expected in 4Q) ofwhich 70% came from 3 large accounts (steel, textile and petrochemical). Of theRBI list relapse from RL was INR27b, 5:25 INR60b and SDR accounts were INR43b

Total amount of RBI AQR related list for subs aggregate was INR170b of which50% recognized in the current quarter

Excluding RBI AQR slippages were INR59b. Expect FY17 slippages to be in the range of INR60-70b a quarter ARC sale during 9MFY16m stood at INR7.9b of which INR4b happened in

3QFY16. Total security receipts outstanding are INR56b of which INR6b receivedin 9MFY16

Of the total 5:25 done till date of INR169.5b (13 accounts), INR60b is alreadyunder NPA. INR40b is the pipeline for 5:25

Of the total SDR done till date of INR164.9b (17 accounts), INR43b is alreadyunder NPA. INR84b (12accounts) is the SDR done in 3Q

Of the total steel sector exposure of INR790b -56% is stressed. INR130b NPA,INR50b SDR and rest is either 5:25 or restructured. Of the rest exposureINR100b can be at risk

11 February 2016 4

State Bank of India

Of the top 10 highly levered corporate groups, SBIN has exposure in 7 groups(total exposure 4.8% of balance sheet). Of this 4 groups, which in the pastfeatured in the SMA2 category exposure was 2.8% of balance sheet and rest 3groups never featured in SMA2

Counter cyclical provisions available on the balance sheet stands at INR23b Total OSRL of subs at INR273.3b Don’t expect major impact of MCLR guidelines Sharp increase in power exposure is led by a) higher disbursements to NTPC,

PGCIL etc. b) refinancing 2 large operational power projects

SBI Subsidiaries 3QFY16 performance SBI's subsidiary banks 3QFY16 reported net loss of INR1.8b led by ~INR6.9b loss

reported by SBP. PPoP grew by 12% YoY (-3% QoQ) to INR24.6b. Key observations on overall performance a) A quarter marred by regulatory

action, GNPA in absolute terms increased just 2% YoY and 11% QoQ – Bankshave reported higher relapse from RL b) Loan growth moderated further andremained muted at +5%YoY – capital conservation exercise and realigning theportfolio to RAM leading to below average industry growth, c) Despite higherstress addition, our calculation suggest largely stable NIMs QoQ (based on NIIgrew ~2% vs. loan increase of ~3% QoQ) – helped by fall in cost of funds, d)Revenue growth remains in the range of 8-10% d) strong opex control (+6% YoY– Sixth consecutive quarter of less than 10% YoY) drove the healthy PPP growth(+12% YoY)

Asset quality – Disclosures limited a) GNPAs increased just 10% QoQ (+2% YoY),b) PCR remained stable QoQ at 45.9%. Except SBH (13%) and SBM (34%) allother associate banks reported less than 10% QoQ increase in GNPA. On a YoYbasis, SBT reported 23% decline in GNPA whereas (led by large sale to ARC in2Q), other subs reported just 10% increase c) Provisions charge during thequarter to P&L stood at INR24.6b whereas, specific cumulative provisionsincreased just INR9.5b – Indicating higher write offs (6-8% of closing GNPA of2Q). Sale to ARCs during the quarter was negligible. Considering the highexposure of SBI associates for some of the accounts referred for 5:25,refinancing would have been higher.

PPP growth of 12% despite moderate loan growth

11 February 2016 5

State Bank of India

Exhibit 3: SBI Subsidiaries Asset quality pressures dent profitability INR m FY14 FY15 FY16

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Interest Income 115,397 117,336 122,460 123,022 122,682 124,765 123,832 125,613 127,947 128,844 127,564 Interest Expense 81,995 83,944 88,030 87,190 87,891 88,933 88,493 88,565 89,669 91,192 89,225 Net Interest Income 33,402 33,391 34,430 35,831 34,791 35,832 35,339 37,048 38,278 37,651 38,338 % Change (Y-o-Y) 3.5 4.4 5.0 12.1 4.2 7.3 2.6 3.4 10.0 5.1 8.5 Other Income 11,200 8,013 8,079 14,254 10,499 9,028 11,647 19,232 11,393 12,236 12,820 % Change (Y-o-Y) 36.0 6.7 1.6 10.3 -6.3 12.7 44.2 34.9 8.5 35.5 10.1 Net Income 44,602 41,405 42,509 50,085 45,290 44,860 46,985 56,280 49,670 49,888 51,158 % Change (Y-o-Y) 10.1 4.8 4.3 11.6 1.5 8.3 10.5 12.4 9.7 11.2 8.9 Operating Expenses 21,660 23,233 23,890 25,218 24,166 23,876 25,091 27,078 24,740 24,563 26,591 % Change (Y-o-Y) 19.0 26.4 27.9 13.5 11.6 2.8 5.0 7.4 2.4 2.9 6.0 Operating Profit 22,942 18,172 18,619 24,867 21,124 20,984 21,894 29,202 24,931 25,324 24,567 % Change (Y-o-Y) 2.9 -14.0 -15.7 9.7 -7.9 15.5 17.6 17.4 18.0 20.7 12.2 Other Provisions 11,732 13,375 9,850 10,580 10,554 12,608 11,209 10,639 11,600 12,380 24,581 Profit before Tax 11,210 4,797 8,769 14,287 10,569 8,376 10,686 18,562 13,331 12,944 -14 Tax Provisions 2,842 629 4,319 3,500 3,547 2,059 3,820 6,763 4,953 4,211 1,801 Net Profit 8,369 4,167 4,450 10,788 7,022 6,317 6,866 11,799 8,378 8,734 -1,815 % Change (Y-o-Y) -11.7 -48.0 -55.7 16.8 -16.1 51.6 54.3 9.4 19.3 38.3 -126.4 Loan Gr. (YoY, %) 14.4 17.2 9.7 6.8 8.0 4.4 4.9 5.5 5.5 3.7 5.3 Gross NPA (INR b) 139.8 162.1 181.7 182.1 176.5 190.1 197.7 167.8 186.8 182.3 202.2 Gross NPA (%) 4.2 4.7 5.2 5.0 4.9 5.3 5.4 4.4 4.9 4.9 5.2 Net NPA ( INR b) 76.1 93.1 106.3 107.2 99.6 110.0 117.8 96.9 103.8 99.1 109.4 Net NPA (%) 2.3 2.7 3.1 3.0 2.8 3.1 3.3 2.6 2.8 2.7 2.9 PCR (%) 45.6 42.6 41.5 41.1 43.6 42.1 40.4 42.3 44.5 45.7 45.9 Tax Rate (%) 25.3 13.1 49.3 24.5 33.6 24.6 35.7 36.4 37.2 32.5 NM

Source: MOSL, Company

Exhibit 4: Moderate NII growth led by tepid loan growth 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 6,213 6,446 -3.6 5,941 4.6 SB of Hyderabad 12,028 11,271 6.7 10,859 10.8 SB of Mysore 5,066 5,263 -3.7 4,932 2.7 SB of Patiala 6,339 6,491 -2.3 6,130 3.4 SBBJ 8,691 8,181 6.2 7,476 16.3 Total 38,338 37,651 1.8 35,339 8.5


Exhibit 5: Strong cost control continued 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 4,548 4,979 -8.7 4,957 -8.3SB of Hyderabad 7,148 6,479 10.3 6,641 7.6 SB of Mysore 4,302 3,877 11.0 3,879 10.9 SB of Patiala 5,129 4,054 26.5 5,081 0.9 SBBJ 5,465 5,175 5.6 4,532 20.6 Total 26,591 24,563 8.3 25,091 6.0


Exhibit 6: Operating profitability aided by non-core income and cost control 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 4,130 3,732 10.7 3,482 18.6 SB of Hyderabad 8,541 8,079 5.7 7,782 9.8 SB of Mysore 2,682 3,028 -11.4 2,785 -3.7SB of Patiala 3,705 5,382 -31.2 2,969 24.8 SBBJ 5,509 5,105 7.9 4,877 13.0 Total 24,567 25,324 -3.0 21,894 12.2


11 February 2016 6

State Bank of India

Exhibit 7: On aggregate basis, subs have reported net loss marred by SBP’s performance 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 915 1,028 -11 743 23 SB of Hyderabad 1,850 3,753 -51 3,339 -45SB of Mysore 269 1,320 -80 962 -72SB of Patiala -6,910 826 -936 188 -3778SBBJ 2,061 1,806 14 1,634 26 Total -1,815 8,734 -120.8 6,866 -126.4


Exhibit 8: Aggregate GNPA increased 11% QoQ; +2% YoY 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 26,039 25,692 1.4 33,668 -22.7SB of Hyderabad 58,315 51,678 12.8 53,935 8.1 SB of Mysore 29,147 21,758 34.0 25,836 12.8 SB of Patiala 57,886 53,850 7.5 54,688 5.8 SBBJ 30,790 29,356 4.9 29,600 4.0 Total 202,177 182,334 10.9 197,727 2.3


Exhibit 9: GNPA ratio increased 36bp QoQ to 5.2% v/s SBIN parent at 5.1% (% of loans) 3QFY16 2QFY16 Chg (bp) 3QFY15 Chg (bp)

SB of Travancore 3.87 3.82 5 4.91 -104SB of Hyderabad 5.28 4.92 36 5.32 -4SB of Mysore 5.48 4.19 129 5.09 39 SB of Patiala 7.02 6.73 29 6.95 7 SBBJ 4.22 4.20 2 4.38 -16Total 5.23 4.87 36 5.39 -16


Exhibit 10: Aggregate NNPA increased 10% QoQ; -7% YoY 3QFY16 2QFY16 QoQ Gr % 3QFY15 YoY Gr %

SB of Travancore 16,281 14,981 8.7 20,520 -20.7SB of Hyderabad 28,946 24,221 19.5 23,700 22.1 SB of Mysore 16,173 11,281 43.4 15,392 5.1 SB of Patiala 32,375 33,907 -4.5 40,701 -20.5SBBJ 15,640 14,693 6.4 17,453 -10.4Total 109,414 99,082 10.4 117,765 -7.1


Exhibit 11: Aggregate NNPA ratio increased 19bp QoQ to 2.9% (similar to SBIN parent) 3QFY16 2QFY16 CHG (BPS) 3QFY15 CHG (BPS)

SB of Travancore 2.46 2.27 19 3.06 -60SB of Hyderabad 2.71 2.39 32 2.43 28 SB of Mysore 3.12 2.22 90 3.11 1 SB of Patiala 4.07 4.37 -30 5.31 -124SBBJ 2.20 2.15 5 2.64 -44Total 2.90 2.71 19 3.28 -38


Exhibit 12: Aggregate PCR remained stable at ~46% 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16

SB of Travancore 39.1 40.7 40.1 41.7 37.5 SB of Hyderabad 56.1 52.9 51.9 53.1 50.4 SB of Mysore 40.4 47.5 51.4 48.2 44.5 SB of Patiala 25.6 30.1 33.5 37.0 44.1 SBBJ 41.0 39.9 48.2 50.0 49.2 Total 40.4 42.3 44.5 45.7 45.9


GNPA and NNPA in absolute terms increased QoQ by

11%/10% and in % terms increased 36bp/19bp to

5.2%/2.9%.

PCR (calculated) remained stable QoQ at 46%

11 February 2016 7

State Bank of India

Valuation and view After below system loan growth, pick-up in growth during past couple of quarter

is impressive (driven by A and above rated loans). However, decline in margins(due to focus on high rated corporate) and asset quality pressures in the nearterm are likely to keep profits under pressure.

We expect PAT CAGR of 10% over FY15-18E and RoA is expected to improve to0.63% by FY18 as compared 0.5% in FY16. ROEs are expected to remain stable at10-11%, similar to FY15, weak revenue growth is likely to offset by strong costcontrols keeping core operating performance stable. Core operating profit CAGRis expected to be 9% over FY16-18E.

SBIN is highly levered to macro-economic conditions and improvement ininvestment climate and interest rates would assuage asset quality fears. Ourcredit costs assumptions remain very conservative. A 10bp decline in credit costwould lead to RoA benefit of ~5bp+.

SBIN remains our preferred pick to play recovery in Indian economy with lowestNSL at 6.4%, relatively healthy PCR of 65%, conservation of capital, healthycapitalization (CET of ~9.4%), strong liability franchise (Retail deposits of >95%)and focus on core operating profitability.

The stock trades at 0.6/0.5x FY16/17 consol. BV of INR225/INR244 and 7.7x/6.1xFY16/17 consol. EPS of INR23.8/INR28.4. Reiterate Buy with a target price ofINR215 (0.8x FY17 con BV +INR13 for Insurance) – based on RI model. Weassume 14% cost of equity (7.75% risk free rate, Beta 1.25 and 5% market riskpremium and terminal growth of 5%).

Exhibit 13: We cut earnings estimate by 24-26% for FY17/18E led by lower NIMs and higher credit costs

INR B Old Estimates Revised Estimates Change (%)

FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 Net Interest Income 567 678 766 554 625 702 -2.3 -7.9 -8.3Other Income 252 279 316 260 284 312 3.2 1.6 -1.0Total Income 820 958 1,081 815 909 1,014 -0.6 -5.1 -6.2Operating Expenses 418 455 497 419 461 507 0.4 1.2 2.0 Operating Profits 402 503 585 395 448 508 -1.6 -10.9 -13.2Provisions 187 216 227 226 229 243 20.6 6.1 7.0 PBT 215 287 357 170 219 265 -21.0 -23.6 -26.0Tax 71 98 122 56 74 90 -21.0 -23.6 -26.0PAT 144 189 236 114 145 175 -21.0 -23.6 -26.0Margins (%) 2.92 3.05 2.99 2.85 2.82 2.76 Credit Cost (%) 1.20 1.20 1.10 1.50 1.30 1.20 RoA (%) 0.67 0.78 0.84 0.53 0.60 0.63 RoE (%) 10.89 12.71 14.27 8.68 9.98 11.12


Exhibit 14: One year forward P/BV


Exhibit 15: One year forward P/E


0.7

2.3

1.3

0.7 0.3

1.1

1.9

2.7

Feb-

06

May

-07

Aug-

08

Nov

-09

Feb-

11

May

-12

Aug-

13

Nov

-14

Feb-

16

PB (x) Peak(x) Avg(x) Min(x)

5.5

16.3

9.7

5.4

3

8

13

18

Feb-

06

May

-07

Aug-

08

Nov

-09

Feb-

11

May

-12

Aug-

13

Nov

-14

Feb-

16

PE (x) Peak(x) Avg(x) Min(x)

Buy with a target price of INR215 (0.8x FY17E Cons BV

+INR13 for Insurance).

11 February 2016 8

State Bank of India

Exhibit 16: DuPont Analysis: Operating leverage and lower credit costs to drive ROA improvement Y/E MARCH FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E Net Interest Income 2.64 2.48 2.35 2.86 3.38 3.06 2.93 2.87 2.57 2.58 2.53 Fee income 0.92 0.90 0.96 1.02 0.95 0.80 0.75 0.73 0.70 0.69 0.67

Fee to core Income 23.2 22.7 25.1 24.1 21.0 19.2 18.5 18.0 18.5 18.3 18.4 Core Income 3.57 3.38 3.31 3.88 4.33 3.85 3.68 3.59 3.27 3.26 3.20 Operating Expenses 1.96 1.86 2.01 2.02 2.04 2.02 2.13 2.01 1.95 1.90 1.83

Cost to Core Income 54.9 54.9 60.9 52.1 47.1 52.4 57.8 56.1 59.4 58.2 57.1 Employee cost 1.21 1.16 1.26 1.34 1.33 1.27 1.34 1.23 1.17 1.11 1.03 Emp to total exp (%) 61.8 62.3 62.8 66.1 65.1 62.8 63.0 60.9 60.0 58.1 56.2 Others 0.75 0.70 0.75 0.69 0.71 0.75 0.79 0.79 0.78 0.80 0.80 Core Operating Profit 1.61 1.52 1.29 1.86 2.29 1.83 1.55 1.58 1.33 1.36 1.37 Trading and others 0.42 0.60 0.52 0.37 0.18 0.31 0.36 0.45 0.51 0.49 0.45 Operating Profit 2.03 2.13 1.82 2.23 2.47 2.14 1.91 2.03 1.83 1.85 1.83 Provisions 0.41 0.44 0.44 0.91 1.02 0.77 0.95 1.02 1.05 0.94 0.88

NPA 0.31 0.29 0.46 0.74 0.90 0.73 0.82 0.90 0.96 0.84 0.77 Others 0.10 0.15 -0.02 0.17 0.12 0.03 0.13 0.12 0.09 0.11 0.10

PBT 1.62 1.68 1.38 1.31 1.44 1.38 0.96 1.01 0.79 0.90 0.95 Tax 0.58 0.60 0.47 0.59 0.53 0.40 0.31 0.32 0.26 0.31 0.32

Tax Rate 35.5 35.7 34.2 44.7 36.7 29.3 32.7 32.2 33.0 34.0 34.0 RoA 1.04 1.08 0.91 0.73 0.91 0.97 0.65 0.68 0.53 0.60 0.63

Leverage (x) 16.04 15.76 16.37 17.56 17.54 16.40 16.17 16.37 16.47 16.72 17.66 RoE 16.75 17.05 14.87 12.75 16.05 15.94 10.49 11.17 8.68 9.98 11.12


Exhibit 17: DuPont Analysis: Moderation in core profitability offset by higher non-core income Y/E MARCH 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY15 3QFY16 Net Interest Income 2.96 2.92 2.94 2.88 2.92 2.98 2.68 2.74 2.56 Fee income 0.84 1.16 0.73 0.77 0.80 1.10 0.72 0.70 0.76

Fee to core income (%) 28.34 39.64 24.68 26.85 27.53 36.95 26.88 25.45 29.86 Core Income 3.79 4.08 3.66 3.65 3.72 4.08 3.40 3.44 3.32 Operating Expenses 2.16 2.01 1.93 2.04 2.06 2.19 1.88 1.96 1.91

Cost to Core Income (%) 56.90 49.18 52.76 55.96 55.32 53.69 55.20 56.96 57.65 Employee cost 1.38 1.20 1.23 1.21 1.24 1.33 1.15 1.18 1.15

Emp cost to Opex (%) 63.68 59.58 63.84 59.04 60.10 60.70 61.41 60.31 60.11 Others 0.78 0.81 0.70 0.84 0.82 0.86 0.72 0.78 0.76

Core operating Profits 1.64 2.08 1.73 1.61 1.66 1.89 1.52 1.48 1.41 Non-Interest income 0.99 1.49 0.94 0.99 1.11 1.72 0.99 1.19 1.16 Trading and others 0.15 0.33 0.22 0.22 0.31 0.62 0.27 0.49 0.40 Operating Profits 1.79 2.41 1.95 1.83 1.97 2.51 1.80 1.97 1.80 Provisions 0.97 1.34 0.78 0.93 1.11 1.33 0.78 0.84 1.49

NPAs 0.80 1.33 0.87 0.87 1.00 0.94 0.66 0.74 1.44 Others 0.17 0.00 -0.09 0.05 0.11 0.40 0.13 0.10 0.06

PBT 0.81 1.07 1.17 0.90 0.86 1.18 1.02 1.14 0.31 Tax 0.29 0.38 0.43 0.23 0.24 0.42 0.29 0.39 0.10

Tax Rate (%) 35.59 35.80 36.70 25.24 28.32 35.66 29.02 34.31 32.34 RoA 0.52 0.69 0.74 0.67 0.62 0.76 0.72 0.75 0.21 Leverage 15.7 15.5 15.0 14.9 14.9 15.4 15.5 14.8 14.6 RoE 8.24 10.71 11.16 10.04 9.17 11.65 11.17 11.02 3.05


11 February 2016 9

State Bank of India

Story in charts

Exhibit 18: ~70% of slippages in 3QFY16 related to RBI AQR Exhibit 19: Upgrades/recoveries have remained low

Exhibit 20: Overall GNPA ratio increased 95bp QoQ Exhibit 21: NNPA ratio increased 75bp QoQ; PCR (incl. w/o) declined 525bp QoQ (65.2%)

Exhibit 22: Large and Mid corporate GNPA ratios spike (%)


Exhibit 23: OSRL declines led by lower fresh restructuring and higher relapse from RL


61

83

82

44

108

71

82

59

138

84

114

79

99

77

70

48

73

59

207

3.7 4.9 4.5

2.3

5.6

3.6 3.9 2.7

6.0

3.6 4.7

3.0 3.7

2.8 2.51.6

2.4 1.9

6.7

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16

Slippages (INR b) Slippages Ratio (%)

31

18

20

47

33

31

28

57

29 38

28

84

45

26

13

52

27

15

10

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16

Upgradation & Rec (INR b)

278

339

401

397

472

492

535

512 609

642

678

616

604

607

620

567

564

568 72

8

3.5 4.

2 4.6

4.4 5.

0 5.2 5.3

4.8 5.

6 5.6

5.7

5.0

4.9

4.9

4.9

4.3

4.3

4.2 5.

1

1QFY

121H

FY12

9MFY

12FY

121Q

FY13

1HFY

139M

FY13

FY13

1QFY

141H

FY14

9MFY

14FY

141Q

FY15

1HFY

159M

FY15

FY15

1QFY

161H

FY16

9MFY

16

Gross NPA (INR b) Gross NPA (%)12

4 16

1 18

8 15

8 20

3 22

6 25

4 22

0 30

0 32

2 37

2 31

1 31

9 33

0 34

5 27

6 28

7 28

6 40

2

1.6 2.0 2.2

1.8 2.2 2.4 2.6

2.1

2.8 2.9 3.22.6 2.7 2.7 2.8

2.1 2.2 2.1

2.9 1Q

FY12

1HFY

129M

FY12

FY12

1QFY

131H

FY13

9MFY

13FY

131Q

FY14

1HFY

149M

FY14

FY14

1QFY

151H

FY15

9MFY

15FY

151Q

FY16

1HFY

169M

FY16

Net NPA (INR b) Net NPA (%)

1.0

11.1

7.9 9.2

1.3

0.5 9.

8

7.8 8.9

0.9 0.4

10.3

8.6 9.4

1.2

0.4

10.6

8.7

8.7

1.0 2.

6

14.3

8.4

8.5

1.0

Large corp. Mid Corp. SME Agri Retail

FY14 FY15 1QFY16 1HFY16 9MFY16

139

162

141

163

164

219

238

322

330

392

394

431

422

440

465

558

560

535

486

1.8 2.0 1.7 1.9 1.82.4 2.4

3.1 3.1 3.6 3.4 3.6 3.5 3.6 3.84.3 4.4 4.0

3.5

1QFY

121H

FY12

9MFY

12FY

121Q

FY13

1HFY

139M

FY13

FY13

1QFY

141H

FY14

9MFY

14FY

141Q

FY15

1HFY

159M

FY15

FY15

1QFY

161H

FY16

9MFY

16

O/s Restructured Loan (INR b) as % of loan book

11 February 2016 10

State Bank of India

Story in charts

Exhibit 24: Cost to core income ratio inches higher (%) Exhibit 25: Loan growth recovers led by retail, large and mid corporate segment

Exhibit 26: CD ratio improves QoQ (%)

Source:MOSL, Company

Exhibit 27: Domestic CASA ratio improved 50bp YoY (%)


49 49

45 47 47

52 51

59 60 62

59

51 54

58 57 55

57 59 60

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16

7.9

8.1

8.7

8.9

9.5

9.6

10.1

10

.8

11.0

11

.4

11.8

12

.5

12.3

12

.4

12.7

13

.4

13.1

13

.7

14.3

19

17

17

16 20

18

16

21

16 19

17

15

13

9 7 7 7 10

13

1QFY

121H

FY12

9MFY

12FY

121Q

FY13

1HFY

139M

FY13

FY13

1QFY

141H

FY14

9MFY

14FY

141Q

FY15

1HFY

159M

FY15

FY15

1QFY

161H

FY16

9MFY

16

Loans (INR t) YoY Gr (%)

75 75 78 77 76 75

78 80

77 79

77 79

76 73 73 74

70 71

74

1QFY

121H

FY12

9MFY

12FY

121Q

FY13

1HFY

139M

FY13

FY13

1QFY

141H

FY14

9MFY

14FY

141Q

FY15

1HFY

159M

FY15

FY15

1QFY

161H

FY16

9MFY

16

Calc. Domestic CD Ratio 47

.9

47.4

47

.5

46.6

46

.1

45.0

45

.5

46.5

44

.7

43.6

43

.9

44.4

43

.5

42.8

42

.6

42.9

41

.7

42.2

42

.7

1QFY

121H

FY12

9MFY

12FY

121Q

FY13

1HFY

139M

FY13

FY13

1QFY

141H

FY14

9MFY

14FY

141Q

FY15

1HFY

159M

FY15

FY15

1QFY

161H

FY16

9MFY

16

11 February 2016 11

State Bank of India

SBI Group Performance in 2QFY16

Exhibit 28: Net interest income growth (% YoY)

Source:MOSL/Company

Exhibit 29: Operating profit growth (% YoY)

Source: MOSL/Company

Exhibit 30: Net profit growth (% YoY)

Source:MOSL/Company

Exhibit 31: Gross loans growth (% YoY)


Exhibit 32: Gross NPA (% of loans)

Source:MOSL/Company

Exhibit 33: Calculated PCR (%)


-25

0

25

50

75

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16

SBI (Standalone) SBI Subsidiaries

-30

0

30

60

90

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16


-200

-100

0

100

200

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16


0

6

12

18

241Q

FY10

2QFY

103Q

FY10

4QFY

101Q

FY11

2QFY

113Q

FY11

4QFY

111Q

FY12

2QFY

123Q

FY12

4QFY

121Q

FY13

2QFY

133Q

FY13

4QFY

131Q

FY14

2QFY

143Q

FY14

4QFY

141Q

FY15

2QFY

153Q

FY15

4QFY

151Q

FY16

2QFY

163Q

FY16


-25

0

25

50

75

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16


34

42

50

58

66

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

16


11 February 2016 12

State Bank of India

Exhibit 34: Quarterly Snapshot INR m FY15 FY16 Variation (%) Cumulative Numbers

1Q 2Q 3Q 4Q 1Q 2Q 3Q QoQ YoY 9MFY15 9MFY16 YoY Gr (%) Profit and Loss Net Interest Income 132,522 132,746 137,766 147,118 137,320 142,526 136,065 -5 -1 403,035 415,911 3 Other Income 42,521 45,708 52,378 85,153 50,880 61,973 61,775 0 18 140,606 174,627 24

Trading profits 5,868 4,664 9,195 16,589 8,724 14,940 12,350 -17 34 19,727 36,014 83 Fee Income 28,372 31,109 32,906 49,007 32,021 31,530 35,090 11 7 92,386 98,641 7 Forex Income 4,330 4,528 5,018 5,349 4,887 4,740 5,540 17 10 13,876 15,167 9 Others 3,952 5,407 5,259 14,208 5,249 10,763 8,795 -18 67 14,618 24,806 70

Total Income 175,043 178,454 190,144 232,270 188,200 204,498 197,840 -3 4 543,641 590,538 9 Operating Expenses 87,166 94,234 97,200 108,177 96,179 101,839 101,861 0 5 278,600 299,879 8

Employee 55,646 55,639 58,420 65,665 59,064 61,421 61,226 0 5 169,705 181,710 7 Others 31,520 38,595 38,779 42,511 37,115 40,418 40,635 1 5 108,895 118,168 9

Operating Profits 87,877 84,219 92,945 124,094 92,021 102,659 95,979 -7 3 265,041 290,659 10 Provisions 34,967 42,750 52,349 65,929 39,997 43,606 79,494 82 52 130,066 163,097 25 PBT 52,910 41,469 40,596 58,165 52,024 59,053 16,485 -72 -59 134,975 127,562 -5Taxes 19,419 10,465 11,495 20,744 15,099 20,262 5,332 -74 -54 41,380 40,694 -2PAT 33,491 31,004 29,101 37,420 36,924 38,791 11,153 -71 -62 93,595 86,868 -7Asset Quality (INR b) GNPA 604 607 620 567 564 568 728 28 17 NNPA 319 330 345 276 287 286 402 41 17 GNPA (%) 4.9 4.9 4.9 4.3 4.3 4.2 5.1 95 20 NNPA (%) 2.7 2.7 2.8 2.1 2.2 2.1 2.9 75 9 PCR (Calculated, %) 47.2 45.7 44.4 51.4 49.2 49.7 44.7 -499 31 PCR (Reported, %) 62.7 63.2 63.6 69.1 69.5 70.5 65.2 -525 167 Slippages 99 77 70 48 73 59 207 252 194

Slippage Ratio (%) 3.7 2.8 2.5 1.6 2.4 1.9 6.7 477 426 Prov. for NPA in qtr 39 40 47 46 34 38 76 99 62 126 148 17

Credit Cost (%) 1.3 1.3 1.5 1.5 1.0 1.2 2.2 107 70 Ratios (%) Fees to Total Income 16.2 17.4 17.3 21.1 17.0 15.4 17.7 17.0 16.7 Cost to Core Income 51.5 54.2 53.7 50.2 53.6 53.7 54.9 56.2 58.3 Tax Rate 36.7 25.2 28.3 35.7 29.0 34.3 32.3 30.7 31.9 Loan/Deposit 84.5 82.1 81.6 82.4 79.3 81.8 83.2 Domestic Loan/Deposit 77.9 75.6 75.7 74.0 69.7 71.3 73.6 CAR 12.3 12.3 12.7 12.0 12.0 12.2 12.5

Tier I 9.6 10.1 10.0 9.6 9.6 9.9 9.6 RoA (cal) 0.7 0.7 0.6 0.8 0.7 0.7 0.2 0.7 0.6 -12RoE (Cal) 11.2 10.0 9.2 11.6 11.2 11.0 3.1 10.1 8.4 -171Margins - derived (%) Yield on Advances 10.5 10.5 10.6 10.6 10.3 10.3 10.1 -20 -44 10.5 10.3 -3Cost of Deposits 6.3 6.4 6.4 6.4 6.4 6.3 6.3 -4 -11 6.4 6.3 -1Quarterly margins 3.1 3.1 3.2 3.3 3.0 3.0 2.8 -26 -38 3.1 2.9 -6

11 February 2016 13

State Bank of India

Exhibit 35: Quarterly Snapshot continues FY14 FY15 FY16 Variation (%)

INR b 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q QoQ YoY Balance sheet Capital 7 7 7 7 7 7 7 7 8 8 8 0 4 Reserves & Surplus 1,036 1,075 1,082 1,175 1,211 1,245 1,278 1,277 1,352 1,448 1,458 1 14 Net Worth 1,042 1,081 1,089 1,183 1,218 1,252 1,286 1,284 1,360 1,456 1,466 1 14 Deposits 12,574 12,925 13,499 13,944 14,189 14,738 15,101 15,768 16,135 16,341 16,714 2 11

Domestic 11,812 12,076 12,586 13,060 13,312 13,829 14,177 14,872 15,249 15,422 15,791 2 11 Overseas 762 848 913 884 878 909 923 896 886 919 923 0 0

Borrowings 1,738 1,889 1,900 1,831 1,873 1,868 1,817 2,052 2,067 2,255 2,197 -3 21 Other Liabilities & Prov. 835 862 889 964 864 885 838 1,377 949 1,053 1,111 6 33 Total Liabilities 16,190 16,757 17,377 17,922 18,144 18,743 19,041 20,481 20,511 21,104 21,488 2 13 Assets Cash/RBI 574 633 644 850 734 709 698 1,159 772 783 800 2 15 Short term funds 310 515 403 476 302 528 386 389 370 323 257 -20 -33Investments 4,199 3,985 4,267 3,983 4,361 4,857 4,769 4,818 5,629 5,674 5,443 -4 14 Loans 10,607 11,031 11,489 12,098 11,989 12,096 12,325 13,000 12,801 13,372 13,913 4 13

Domestic 8,745 9,139 9,312 9,955 9,751 9,824 10,079 10,655 10,292 10,713 11,256 5 12 Overseas 1,862 1,892 2,177 2,143 2,238 2,272 2,247 2,345 2,510 2,658 2,657 0 18

Net Fixed Assets 73 76 78 80 81 85 88 93 94 96 96 -1 9 Other Assets 427 517 496 435 676 467 774 1,022 844 856 978 14 26 Total Assets 16,190 16,757 17,377 17,922 18,144 18,743 19,041 20,481 20,511 21,104 21,488 2 13 Deposit Break-up CASA Deposits 5,276 5,263 5,524 5,802 5,791 5,918 6,036 6,378 6,359 6,514 6,743 4 12 Savings Deposits 4,386 4,454 4,658 4,693 4,894 5,009 5,093 5,139 5,391 5,504 5,684 3 12 % of Total Deposits 34.9 34.5 34.5 33.7 34.5 34.0 33.7 32.6 33.4 33.7 34.0 32 28 Current Deposits 890 809 866 1,109 897 909 944 1,239 968 1,010 1,059 5 12 % of Total Deposits 7.1 6.3 6.4 8.0 6.3 6.2 6.2 7.9 6.0 6.2 6.3 15 9 CASA (Cal) 42.0 40.7 40.9 41.6 40.8 40.2 40.0 40.4 39.4 39.9 40.3 48 37 CASA Reported 44.7 43.6 43.9 44.4 43.5 42.8 42.6 42.9 41.7 42.2 42.7 46 12 Domestic Loan Break Up Large Corporate 1,691 1,988 1,997 2,427 2,263 2,330 2,497 2,718 2,560 2,835 3,012 6 21 Mid Corporate 2,070 2,221 2,193 2,284 2,161 2,159 2,106 2,278 2,000 2,047 2,138 4 2 SME 1,754 1,657 1,600 1,798 1,730 1,680 1,679 1,815 1,746 1,766 1,819 3 8 Agriculture 1,100 1,115 1,234 1,203 1,184 1,211 1,204 1,213 1,158 1,184 1,211 2 1 Retail 2,166 2,242 2,308 2,377 2,425 2,493 2,602 2,724 2,801 2,910 3,083 6 18 Others 308 280 328 220 323 281 319 261 363 252 366 45 15 Domestic Loan Mix (%) Large Corporate 19.3 21.7 21.4 24.4 23.2 23.7 24.8 25.5 24.9 26.5 26.8 Mid Corporate 23.7 24.3 23.5 22.9 22.2 22.0 20.9 21.4 19.4 19.1 19.0 SME 20.1 18.1 17.2 18.1 17.7 17.1 16.7 17.0 17.0 16.5 16.2 Agriculture 12.6 12.2 13.3 12.1 12.1 12.3 12.0 11.4 11.3 11.1 10.8 Retail 24.8 24.5 24.8 23.9 24.9 25.4 25.8 25.6 27.2 27.2 27.4 Others 3.5 3.1 3.5 2.2 3.3 2.9 3.2 2.5 3.5 2.4 3.2

11 February 2016 14

State Bank of India

Exhibit 36: Financials – Valuation metrics 66 Rating CMP Mcap EPS (INR) P/E (x) BV (INR) P/BV (x) RoA (%) RoE (%)

(INR) (USDb) FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 ICICIBC* Buy 199 17.5 22.2 26.7 5.9 4.4 147 166 0.89 0.71 1.39 1.44 13.4 14.4 HDFCB Buy 976 37.1 58.9 70.9 16.6 13.8 330 385 2.96 2.54 1.88 1.86 19.2 19.8 AXSB Buy 378 13.6 40.0 47.7 9.4 7.9 250 290 1.51 1.30 1.68 1.68 17.0 17.6 KMB* Neutral 629 17.4 24.7 31.3 25.5 20.1 206 237 3.05 2.65 1.38 1.54 13.9 14.8 YES Buy 714 4.5 75.9 94.0 9.4 7.6 388 463 1.84 1.54 1.82 1.84 21.2 22.1 IIB Buy 813 7.3 49.8 62.8 16.3 12.9 336 390 2.42 2.08 1.98 2.01 15.8 17.3 DCBB Under Review 71 0.3 6.9 7.7 10.3 9.2 68 75 1.05 0.95 0.93 0.85 10.8 10.8 FB Neutral 44 1.1 4.7 5.7 9.2 7.6 52 56 0.85 0.78 0.83 0.87 9.5 10.7 JKBK Neutral 70 0.5 18.0 21.6 3.9 3.2 152 168 0.46 0.41 1.02 1.07 12.4 13.5 SIB Buy 17 0.3 3.1 3.7 5.6 4.6 31 34 0.55 0.51 0.58 0.61 10.3 11.4 Private Aggregate 99.6 13.5 11.2 2.02 1.77

SBIN (cons)* Buy 154 18.1 31.0 38.7 4.6 3.7 254 286 0.56 0.50 0.78 0.84 12.7 14.3 PNB Neutral 77 2.3 15.3 20.1 5.0 3.8 217 235 0.35 0.33 0.43 0.51 7.3 8.9 BOI Neutral 85 1.0 9.3 19.5 9.2 4.4 350 366 0.24 0.23 0.10 0.19 2.7 5.4 BOB Buy 116 4.1 19.3 23.7 6.0 4.9 191 209 0.61 0.55 0.55 0.60 10.5 11.8 CBK Under Review 173 1.3 57.3 74.6 3.0 2.3 610 667 0.28 0.26 0.46 0.52 9.8 11.7 UNBK Buy 119 1.2 43.1 51.8 2.8 2.3 344 386 0.35 0.31 0.66 0.69 13.2 14.2 OBC Under Review 85 0.4 50.0 66.9 1.7 1.3 505 556 0.17 0.15 0.56 0.66 10.3 12.6 INBK Buy 80 0.6 29.5 37.1 2.7 2.2 300 328 0.27 0.24 0.62 0.69 10.2 11.8 CRPBK Neutral 36 0.1 18.7 21.6 1.9 1.6 152 169 0.23 0.21 0.57 0.59 12.9 13.4 ANDB Buy 45 0.4 22.8 27.9 2.0 1.6 196 216 0.23 0.21 0.62 0.65 12.2 13.6 IDBI Neutral 52 1.5 5.6 6.9 9.3 7.6 137 142 0.38 0.37 0.28 0.31 4.2 4.9 DBNK Neutral 28 0.2 10.0 15.6 2.8 1.8 128 141 0.22 0.20 0.38 0.53 8.0 11.6 Public Aggregate 31.3 5.1 4.0 0.47 0.43 HDFC* Buy 1,068 25.5 39 44 16.1 12.4 186 212 3.33 2.55 2.41 2.40 21.9 22.0 LICHF Buy 406 3.1 42 47 9.7 8.6 216 254 1.88 1.60 1.54 1.45 21.2 20.2 DEWH Buy 151 0.7 32 40 4.7 3.8 203 234 0.75 0.65 1.25 1.30 16.9 18.6 IHFL Buy 615 4.0 68 82 9.1 7.5 302 336 2.04 1.83 3.85 3.69 23.6 25.7 GRHF Buy 237 1.3 8 11 28.6 22.5 28 35 8.40 6.76 1.98 2.26 27.8 33.2 REPCO Buy 581 0.5 33 42 17.8 13.9 181 218 3.22 2.67 2.16 2.10 19.7 21.0 RECL Neutral 166 2.5 57 59 2.9 2.8 345 391 0.48 0.43 2.45 2.17 17.6 16.0 POWF Neutral 150 3.0 42 43 3.6 3.5 310 341 0.48 0.44 2.07 1.85 14.1 13.2 SHTF Buy 778 2.7 73 92 10.6 8.5 516 588 1.51 1.32 2.21 2.40 15.1 16.5 MMFS Buy 191 1.6 13 17 14.4 11.3 118 130 1.63 1.47 1.94 2.24 11.8 13.5 BAF Buy 6,160 5.0 303 372 20.4 16.5 1,620 1,932 3.80 3.19 3.02 2.84 20.3 21.0 MUTH Buy 184 1.1 24 31 7.5 5.9 156 176 1.18 1.04 2.92 3.18 16.5 18.9 SKSM Buy 496 0.9 34 46 14.5 10.8 142 177 3.50 2.80 5.25 5.46 27.5 28.8 NBFC Aggregate 52.9 12.0 10.7 1.89 1.69 *Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries

11 February 2016 15

State Bank of India

Financials and valuations

Income Statement (Standalone) (INR Million) Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Interest Income 813,944 1,065,215 1,196,551 1,363,508 1,523,971 1,613,454 1,793,212 1,993,984 Interest Expense 488,680 632,304 753,258 870,686 973,818 1,059,000 1,168,455 1,292,100 Net Interest Income 325,264 432,911 443,293 492,822 550,152 554,454 624,756 701,884 Change (%) 37.4 33.1 2.4 11.2 11.6 0.8 12.7 12.3 Non Interest Income 158,246 143,514 160,368 185,529 225,759 260,452 283,809 312,368 Net Income 483,510 576,425 603,661 678,351 775,911 814,906 908,566 1,014,253 Change (%) 25.1 19.2 4.7 12.4 14.4 5.0 11.5 11.6 Operating Expenses 230,154 260,690 292,844 357,259 386,776 419,416 460,561 506,641 Pre Provision Profits 253,356 315,735 310,817 321,092 389,135 395,489 448,004 507,611 Change (%) 38.3 24.6 -1.6 3.3 21.2 1.6 13.3 13.3 Provisions (excl tax) 103,813 130,902 111,308 159,353 195,995 225,805 228,918 243,022 PBT 149,542 184,833 199,509 161,739 193,140 169,685 219,086 264,590 Tax 66,897 67,760 58,459 52,827 62,124 55,996 74,489 89,960 Tax Rate (%) 44.7 36.7 29.3 32.7 32.2 33.0 34.0 34.0 PAT 82,645 117,073 141,050 108,912 131,016 113,689 144,597 174,629 Change (%) -9.8 41.7 20.5 -22.8 20.3 -13.2 27.2 20.8 Cons. PAT post MI 106,850 153,431 179,162 141,738 169,943 144,825 184,700 220,417 Change (%) -8.9 43.6 16.8 -20.9 19.9 -14.8 27.5 19.3

Balance Sheet Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Equity Share Capital 6,350 6,710 6,840 7,466 7,466 7,763 7,763 7,763 Reserves & Surplus 643,510 832,802 981,997 1,175,357 1,276,917 1,446,801 1,556,796 1,690,187 Net Worth 649,860 839,512 988,837 1,182,822 1,284,382 1,454,564 1,564,559 1,697,950 Deposits 9,339,328 10,436,474 12,027,396 13,944,085 15,767,932 17,660,084 20,132,496 23,152,371 Change (%) 16.1 11.7 15.2 15.9 13.1 12.0 14.0 15.0 of which CASA Dep 4,615,214 4,676,066 5,390,634 5,984,004 6,519,051 7,338,709 8,439,515 9,705,443 Change (%) 21.4 1.3 15.3 11.0 8.9 12.6 15.0 15.0 Borrowings 1,195,690 1,270,056 1,691,827 1,831,309 2,051,503 2,379,218 2,771,977 3,242,787 Other Liab. & Prov. 1,052,484 809,151 954,053 964,130 1,376,980 1,135,221 1,361,493 1,571,690 Total Liabilities 12,237,362 13,355,192 15,662,113 17,922,346 20,480,798 22,629,087 25,830,525 29,664,797 Current Assets 1,228,741 971,632 1,148,202 1,325,496 1,547,558 1,160,904 1,291,536 1,450,371 Investments 2,956,006 3,121,976 3,508,775 3,983,082 4,817,588 5,781,105 6,648,271 7,645,511 Change (%) -0.1 5.6 12.4 13.5 21.0 20.0 15.0 15.0 Loans 7,567,194 8,675,789 10,456,166 12,098,287 13,000,264 14,560,296 16,598,737 19,088,547 Change (%) 19.8 14.7 20.5 15.7 7.5 12.0 14.0 15.0 Fixed Assets 47,642 54,665 70,050 80,022 93,292 104,686 116,570 128,643 Other Assets 437,778 531,130 478,920 435,459 1,022,097 1,022,097 1,175,412 1,351,723 Total Assets 12,237,362 13,355,192 15,662,113 17,922,346 20,480,798 22,629,087 25,830,525 29,664,797

Asset Quality (%) GNPA (INR m) 253,263 396,765 511,894 616,050 567,253 813,356 777,998 713,538 NNPA (INR m) 123,469 158,189 219,565 310,961 275,906 505,305 457,414 368,830 GNPA Ratio 3.29 4.45 4.76 4.97 4.27 5.47 4.60 3.67 NNPA Ratio 1.63 1.82 2.10 2.57 2.12 3.47 2.76 1.93 PCR (Excl Tech. W/O) 51.2 60.1 57.1 49.5 51.4 37.9 41.2 48.3 PCR (Incl Tech. W/O) 65.0 68.1 66.6 62.9 69.1 60.4 66.2 73.7 E: MOSL Estimates

11 February 2016 16

State Bank of India

Financials and valuations

Ratios Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Spreads Analysis (%) Avg. Yield-Earning Assets 8.0 9.2 9.0 8.8 8.8 8.3 8.1 7.8 Avg. Yield on loans 8.6 10.0 9.5 9.1 9.0 8.3 8.1 7.8 Avg. Yield on Investments 6.7 7.9 8.2 8.5 8.0 8.0 7.8 7.5 Avg. Cost-Int. Bear. Liab. 5.0 5.7 5.9 5.9 5.8 5.6 5.4 5.2 Avg. Cost of Deposits 5.0 5.6 6.0 6.0 6.0 5.9 5.7 5.5 Interest Spread 3.0 3.6 3.0 2.9 3.0 2.7 2.6 2.6 Net Interest Margin 3.2 3.8 3.3 3.2 3.2 2.8 2.8 2.8

Profitability Ratios (%) RoE 12.7 16.0 15.9 10.5 11.2 8.7 10.0 11.1 RoA 0.7 0.9 1.0 0.6 0.7 0.5 0.6 0.6 Consolidated RoE 13.5 17.2 16.3 11.1 11.9 9.2 10.5 11.5 Consolidated RoA 0.7 0.9 0.9 0.6 0.7 0.5 0.6 0.6

Efficiency Ratios (%) Cost/Income* 49.5 45.3 50.3 55.6 54.0 56.6 55.5 54.4 Empl. Cost/Op. Exps. 66.1 65.1 62.8 63.0 60.9 60.0 58.1 56.2 Busi. per Empl. (INR m) 73.9 82.2 93.7 107.8 125.9 144.4 164.8 188.7 NP per Empl. (INR lac) 3.9 5.3 6.4 4.8 6.0 5.4 6.9 8.3 * ex treasury and recoveriesAsset-Liability Profile (%) Loans/Deposit Ratio 81.0 83.1 86.9 86.8 82.4 82.4 82.4 82.4 CASA Ratio 49.4 44.8 44.8 42.9 41.3 41.6 41.9 41.9 Investment/Deposit Ratio 31.7 29.9 29.2 28.6 30.6 32.7 33.0 33.0 G-Sec/Investment Ratio 78.2 81.9 76.7 77.4 78.4 68.8 68.0 67.9 CAR 12.0 13.9 12.9 12.4 12.0 11.5 10.8 10.2 Tier 1 7.8 9.8 9.5 9.7 9.6 9.3 8.9 8.5

Valuation Book Value (INR) 101 121 139 150 164 180 194 211 BV Growth (%) -1.4 19.8 14.8 7.8 9.0 9.5 7.9 8.9 Price-BV (x) 1.3 1.1 1.0 0.9 0.9 0.8 0.7 Consol BV (INR) 130 154 177 188 207 225 244 268 BV Growth (%) 0.4 18.3 14.8 6.5 10.0 8.7 8.6 9.4 Price-Consol BV (x) 0.9 0.8 0.8 0.7 0.6 0.6 0.5 Adjusted BV (INR) 88 105 117 121 138 134 153 178 Price-ABV (x) 1.5 1.3 1.3 1.1 1.2 1.0 0.9 Adjusted Consol BV 113 132 147 149 172 167 192 225 Price-Consol ABV (x) 1.1 1.0 1.0 0.8 0.9 0.8 0.6 EPS (INR) 13.0 17.4 20.6 14.6 17.5 14.6 18.6 22.5 EPS Growth (%) -9.9 34.0 18.2 -29.3 20.3 -16.5 27.2 20.8 Price-Earnings (x) 8.8 7.5 10.6 8.8 10.5 8.3 6.9 Consol EPS (INR) 16.8 22.9 26.2 19.0 22.8 18.7 23.8 28.4 Con. EPS Growth (%) -9.0 35.9 14.6 -27.5 19.9 -18.0 27.5 19.3 Price-Consol EPS (x) 6.3 5.5 7.5 6.4 7.7 6.1 5.1 Dividend Per Share (INR) 3.0 3.5 4.2 3.0 3.5 3.0 3.8 4.6 Dividend Yield (%) 2.3 2.7 1.9 2.3 2.0 2.5 3.0 E: MOSL Estimates

11 February 2016 17

State Bank of India

Corporate profile: State Bank of India

Exhibit 39: Shareholding pattern (%) Dec-15 Sep-15 Dec-14

Promoter 60.2 60.2 58.6

DII 18.4 18.4 19.1

FII 12.1 12.4 14.1

Others 9.3 9.1 8.3 Note: FII Includes depository receipts

Exhibit 40: Top holders Holder Name % Holding

Life Insurance Corporation Of India 11.3 HDFC Trustee Company Ltd - HDFC Equity Fund 2.1

Exhibit 41: Top management Name Designation

Arundhati Bhattacharya Chairman

P Pradeep Kumar Managing Director

B Sriram Managing Director

V.G. Kannan Managing Director

Rajnish Kumar Managing Director

Exhibit 42: Directors Name Name

Arundhati Bhattacharya Hasmukh Adhia

P Pradeep Kumar Sunil Mehta

B Sriram Deepak I Amin

V G Kannan Sanjiv Malhotra

Rajnish Kumar Mangalore Devdas Mallya

D Sundaram* Rajiv Kumar

Thomas Mathew* Tribhuwan Nath Chaturvedi

S Venkatachalam* Harichandra Bahadur Singh

Parthasarathy Iyengar* Urjit R Patel

S K Mukherjee

Exhibit 43: Auditors

Name Type

K B Sharma & Co Statutory S N Nanda & Co Statutory S N Mukherji & Co Statutory V P Aditya & Co Statutory S R R K Sharma Associates Statutory T R Chadha & Co Statutory

Exhibit 44: MOSL forecast v/s consensus EPS (INR)

MOSL forecast

Consensus forecast

Variation (%)

FY16 14.6 20.5 -28.8FY17 18.6 25.5 -27.2FY18 22.5 30.7 -26.7

Company description SBI is the oldest and the largest bank in India. Government of India owns 60.2 per cent of the bank’s equity capital. The SBI group offers a wide range of banking products and services. Through its non-banking subsidiaries and joint venture companies, it offers a wide range of financial services, such as merchant banking, fund management, factoring, primary dealership, broking, investment banking, credit cards, life insurance, and general insurance. The bank has ~16k branches and ~58k ATM spread across the country.

Exhibit 38: Sensex rebased

7 November 2015 18

State Bank of India

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