MOSL: STATE BANK OF INDIA (Buy)-Asset quality concerns abating-earnings set to normalize hereon
State Bank of India: Asset quality concerns abating; earnings set to normalize hereon
(SBIN IN, Mkt Cap USD39.4b, CMP INR308, TP INR380, 23% Upside, Buy)
- 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). C/I ratio, thus, stood at 52.5% versus 51.1% in the year-ago period.
- Loan growth stood at 13% YoY/7% QoQ, driven by growth of 27.9% YoY in home loans and 15% YoY in the corporate book. Deposit base increased 7.6% YoY, led by 8.6% YoY growth in SA deposits. The CASA mix stood at 45.7% (v/s 45.2% in 3QFY19).
State Bank of India provides a range of products and services to personal, commercial enterprises, large corporates, public bodies and institutional customers. Its segments include Treasury, which includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts; Corporate/Wholesale Banking, which comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group; Retail Banking, which comprises branches in National Banking Group, which primarily includes Personal Banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group, and Other Banking Business, which includes the operations of all the Non-Banking Subsidiaries/Joint Ventures other than SBI Life Insurance Co. Ltd. and SBI General Insurance Co. Ltd. The Company had approximately 22,500 branches and 58,000 ATMs.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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