Financials Result Review

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    Please refer to important disclosures at the end of this report 1

    Margins improve on aggressive pass through of rate hikes

    During 2QFY2012, earnings growth for the banking sector was aided by

    sequential margin expansion for almost all banks, which offsetted asset-quality

    pressures. The banking industry has been swift in passing on the rate hikes by the

    RBI though hikes in lending rates over the last six months. Also, the lesser

    aggressive stance adopted by bigger established players such as SBI and ICICI

    Bank in terms of credit growth and with HDFC Bank in any case focusing on

    profitable growth rather than just market share (all three have a combined market

    share of ~30% of the systems credit) have given leeway to other smaller banks as

    well to price their loans. Reflecting this, the reported margin for our coverage

    universe improved by ~15bp qoq during 2QFY2012.

    Asset quality deteriorates; some PSU banks buck the trend

    While most PSU banks witnessed asset-quality stress and reported higher

    slippages in 2QFY2012, primarily on account of completion of transition to

    system-based NPA recognition, some banks managed to buck the trend by

    maintaining or sequentially improving their asset quality. Notably, banks that had

    already switched over to system-based NPA recognition before the mandated

    timeline of September 30, 2011, such as BOB, BOM, J&KBK and Vijaya Bank,

    witnessed an improvement in their NPA ratios in 2QFY2012 compared to

    1QFY2012. Apart from slippages arising due to the switchover to system-based

    NPA recognition, delinquencies from the SME and agri books further aggravated

    asset-quality pressures and led to higher provisioning expenses for most banks

    during 2QFY2012. With interest rates expected to remain high until the onset of

    FY2013 and sectors such as infra, real estate and exports continuing to face

    macro headwinds, asset-quality concerns are expected to linger. However, that

    said, incremental provisioning expenses in FY2011 and FY2012 by banks on

    account of switchover to system-based NPA recognition and to meet the increasein NPA prudential norms and the mandated provision coverage ratio of 70% have

    led to a high base. Hence, the percentage increase in actual provisioning

    expenses in the P&L is not expected to increase significantly, even though genuine

    slippages are expected to increase going forward.

    Outlook and valuation

    In light of the macro environment, we prefer banks with a more conservative

    asset-quality profile, especially amongst mid caps (for instance, relatively lower

    yield on advances and moderate credit growth) this includes banks such as

    Syndicate Bank and Bank of Maharashtra. Also, from a medium-term perspective,we continue to prefer large private banks with a strong structural investment case

    within which we prefer Axis Bank and ICICI Bank from a valuation perspective.

    Banking indicatorsParticulars (%)Latest yoy credit growth 18.4

    Latest yoy deposit growth 17.5

    Latest credit-to-deposit ratio 73.9

    MTD avg. LAF borrowings (`cr) 82,717

    MTD avg. 1-year G-Sec yield 8.7

    MTD avg. 10-year G-Sec yield 8.9

    MTD avg. 3-month CP rate 9.7

    MTD avg. 12-month CP rate 10.1Source: RBI, Bloomberg, Angel Research;

    Policy ratesParticulars (%)Repo rate 8.5

    Reverse repo rate 7.5

    MSF rate 9.5

    Cash reserve ratio (CRR) 6.00

    Statutory liquidity ratio (SLR) 24.00

    Source: RBI, Angel Research

    Vaibhav Agrawal022 3935 7800 Ext: 6808

    [email protected]

    Shrinivas Bhutda022 3935 7800 Ext: 6845

    [email protected]

    Varun Varma022 3935 7800 Ext: 6847

    [email protected]

    Financials2QFY2012 Result Review

    Sector Update | Banking

    November 24, 2011

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    Sector Review | Banking

    November 24, 2011 2

    Margins improve on aggressive pass through of rate hikesby banks

    During 2QFY2012, earnings growth for the banking sector was aided by

    sequential margin expansion for almost all banks, which offsetted asset-quality

    pressures. The banking industry has been swift in passing on the rate hikes by the

    RBI though hikes in lending rates over the last six months. Almost all banks raised

    their lending rates by 50bp within a week of a 50bp increment in the repo rate on

    July 26, 2011.

    Exhibit 1:Margin expansion* qoq for banks under coverage

    Source: Company, Angel Research, Note: Domestic NIMs for SBI, BOB and BOI

    Exhibit 2:Pvt. banks and SBI outperform on NII front yoy

    Source: Company, Angel Research

    The lesser aggressive stance adopted by bigger established players such as SBI

    and ICICI Bank in terms of credit growth and with HDFC Bank in any casefocusing on profitable growth rather than just market share (all three have a

    combined market share of ~30% of the systems credit) have given leeway to other

    smaller banks as well to price their loans.

    SBIs capital adequacy dropped significantly post the pension adjustments from its

    reserves during 4QFY2011 (tier-I of 7.5% in 2QFY2012 compared to 9.6% in

    3QFY2011). Further, with the government being strapped for cash due to its own

    fiscal woes coupled with distressed market conditions, capital infusion has been

    put on hold by the government, making SBI more focused on preserving capital

    and generating more capital internally through higher profits. Moreover, its loan

    book has witnessed continued stress over the last six months, prompting the banksmanagement, which changed post 3QFY2011 results, to adopt a more cautious

    and profitability-focused lending approach. ICICI Bank has continued with its

    consolidation strategy by exiting unattractive retail-based business segments and

    reducing retail-based loans (35.0% share as of 2QFY2012 compared to 38.7%

    share as of 4QFY2011) in favor of corporate and overseas advances.

    With all three banks looking to maintain or improve their margins rather than

    chasing market share gains, borrowers had to settle for higher rates, leading to

    higher margin expansion for most other banks as well, creating a buffer to absorb

    NPA provisioning expenses. Reflecting this, even though easing liquidity has kept

    deposit rates in check in the last six months, banks have been able to increasetheir lending rates by 50bp-100bp. Consequently, the reported margin for our

    coverage universe improved by ~15bp qoq during 2QFY2012.

    (40.0)

    (30.0)

    (20.0)

    (10.0)

    -

    10.0

    20.0

    30.0

    40.0

    50.0

    60.0

    AXSB

    VIJAYA

    UCOBK

    BOI

    CRPBK

    INDBK

    DENABK

    ALLBK

    BOB

    SYNBK

    CANBK

    SIB

    SBI

    UTDBK

    PNB

    ANDBK

    UNBK

    YESBK

    BOM

    CENTBK

    IOB

    ICICIBK

    IDBI

    FEDBK

    HDFCBK

    J&KBK

    OBC

    (bp)

    17.5

    17.9

    16.6

    12.3

    6.8

    9.8

    8.1

    8.4

    0.0

    4.0

    8.0

    12.0

    16.0

    20.0

    Large Pvt Other Pvt PSU PSU (excl. SBI)

    % chg (yoy) % chg (qoq)

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    Sector Review | Banking

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    Exhibit 3:Yield on advances (calculated) for banks under our coverageBanks YoA - 1HFY12 YoA - 2HFY11 Diff. ALLBK 11.96 10.20

    YESBK 12.01 10.55 146 ANDHBK 12.29 11.00

    UCOBK 11.07 9.78 128

    FEDBK 12.37 11.09 128

    CORPBK 10.48 9.20 128

    AXSB 10.14 8.95

    IDBI 11.21 10.04 118

    CENTBK 11.07 9.97 110

    CANBK 10.51 9.42 109

    SIB 12.06 11.03 103

    VIJBK 11.07 10.06

    PNB 11.09 10.11 99

    SBI 9.84 8.90 94

    OBC 11.09 10.21 88

    SYNBK 10.69 9.81 88

    IOB 10.73 9.87 87

    BOM 10.76 9.96 80

    DENABK 10.98 10.22 75

    INDBK 11.22 10.47 75

    UNIONBK 10.21 9.48 73

    HDFCBK 10.91 10.22 69

    ICICIBK 9.16 8.47 69

    BOB 9.03 8.35 68

    UTDBK 10.61 10.13 49

    BOI 8.87 8.46 41

    J&KBK 11.44 11.08 36

    Source: Company, Angel Research

    Credit growth slows on expected lines amid a weakening

    economic outlook

    Credit growth trends for SCBs have been on a declining trend since the beginningof CY2011. Credit growth as of November 4, 2011, dropped to its lowest level

    since June 2010 (17 months) to below 19% (at 18.4%) on account of slowing

    economy as well as a high base effect (22.1% yoy growth in November 2010).

    Incremental credit in FY2012 YTD is lower by 21.9% yoy compared to last year

    (FY2011 YTD); however, deposit accretion continued to be healthy with

    incremental YTD deposits growing by 66.7% yoy.

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    Exhibit 4:Deposits increase, while credit offtake slows

    Source: RBI, Angel Research; Note: #Between March 26, 2010, and

    November 05, 2010, * Between March 25, 2011, and November 04, 2011

    Exhibit 5:Credit deposit trends

    Source: Company, Angel Research

    The global economy inflicted by euro-sovereign crisis is facing headwinds and the

    domestic economy has also been losing steam. High inflation and interest rates

    are expected to keep credit growth sluggish going into FY2013. Accordingly, we

    expect credit growth to slow down to 16-17% for FY2012.

    Exhibit 6:Advances growth (%)Banks-Type 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)Large PSU 2,036,842 1,993,903 2.2 1,712,031 19.0

    Mid PSU 1,144,603 1,105,949 3.5 944,775 21.2

    New Pvt 665,636 623,385 6.8 543,613 22.4Old Pvt 156,091 147,794 5.6 122,748 27.2

    Grand Total 4,003,173 3,871,030 3.4 3,323,167 20.5Source: Company, Angel Research

    Exhibit 7:Deposits growth (%)Banks-Type 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)Large PSU 2,625,803 2,555,820 2.7 2,220,742 18.2

    Mid PSU 1,581,672 1,522,322 3.9 1,322,580 19.6

    New Pvt 789,056 735,313 7.3 674,893 16.9Old Pvt 214,595 202,953 5.7 169,377 26.7

    Grand Total 5,211,126 5,016,409 3.9 4,387,591 18.8Source: Company, Angel Research

    Exhibit 8:CD ratio for banks under our coverage

    Source: Company, Angel Research

    286,002319,960

    241,815

    449,403

    -

    100,000

    200,000

    300,000

    400,000

    500,000

    Credit offtake (` cr) Deposit mobilisation (` cr)

    FY2011# FY2012*(`cr)

    -

    5.0

    10.0

    15.0

    20.0

    25.0

    30.0

    Oct-08

    Jan-0

    9

    Apr-09

    Jul-09

    Oct-09

    Jan-1

    0

    Apr-10

    Jul-10

    Oct-10

    Jan-1

    1

    Apr-11

    Jul-11

    Oct-11

    Credit growth (%) Depos it growth (% )

    55.0

    65.0

    75.0

    85.0

    HDFCBK

    SYNBK

    YESBK

    IOB

    ANDBK

    UNBK

    INDBK

    PNB

    UCOBK

    BOM

    AXSB

    FEDBK

    OBC

    CANBK

    SIB

    UTDBK

    VIJAYA

    CENTBK

    CRPBK

    ALLBK

    DENABK

    J&KBK

    (%)

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    Exhibit 9:CASA yearly growth rate trendsBank Saving Acc.2QFY12 Saving Acc.2QFY11 yoy (%) Current Acc.2QFY12 Current Acc.2QFY11 yoy (%) CASA2QFY12 CASA2QFY11 yoy (%)IDBI 18,265 10,925 67.2 15,216 12,621 20.6 33,481 23,546 42.2

    AXSB 46,786 37,812 23.7 35,354 27,374 29.2 82,140 65,186 26.0

    J&KBK 13,515 11,031 22.5 4,590 5,298 (13.4) 18,105 16,329 10.9

    FEDBK 10,183 8,596 18.5 1,983 2,025 (2.1) 12,166 10,621 14.5

    SIB 5,764 4,888 17.9 1,274 1,091 16.8 7,038 5,979 17.7

    CANBK 64,043 54,339 17.9 16,732 17,662 (5.3) 80,775 72,001 12.2

    BOI 63,513 54,153 17.3 13,140 13,915 (5.6) 76,652 68,068 12.6

    HDFCBK 69,017 59,525 15.9 40,093 39,363 1.9 109,110 98,888 10.3

    ALLBK 35,875 30,982 15.8 7,609 8,448 (9.9) 43,484 39,430 10.3

    BOB 68,541 59,349 15.5 21,639 20,466 5.7 90,180 79,815 13.0

    PNB 100,491 87,296 15.1 23,531 23,687 (0.7) 124,022 110,983 11.7

    BOM 21,699 19,153 13.3 6,550 5,989 9.4 28,249 25,142 12.4UTDBK 24,693 21,834 13.1 6,513 5,578 16.8 31,206 27,412 13.8

    OBC 25,558 22,660 12.8 8,624 9,261 (6.9) 34,182 31,921 7.1

    IOB 33,610 29,863 12.6 11,301 9,231 22.4 44,912 39,094 14.9

    VIJBK 13,261 11,800 12.4 4,596 4,306 6.7 17,857 16,106 10.9

    INDBK 27,804 24,797 12.1 6,813 6,807 0.1 34,617 31,604 9.5

    CORPBK 16,645 14,850 12.1 9,660 9,414 2.6 26,305 24,264 8.4

    ICICIBK 70,149 63,248 10.9 32,997 34,857 (5.3) 103,146 98,105 5.1

    SYNBK 32,578 29,563 10.2 10,497 10,911 (3.8) 43,075 40,474 6.4

    UCOBK 25,787 23,552 9.5 6,257 5,251 19.2 32,044 28,803 11.3

    ANDHBK 19,355 17,754 9.0 5,338 6,131 (12.9) 24,693 23,885 3.4

    CENTBK 49,071 45,027 9.0 12,717 12,763 (0.4) 61,788 57,790 6.9

    Source: Company, Angel ResearchExhibit 10:Banks with highest credit growthBank 1yr (%) 3year CAGR 5yr CAGRIOB 44.2 22.8 26.3VIJAYA 36.4 15.4 23.9SIB 29.9 25.1 26.3AXSB 26.7 33.6 44.9BOM 24.0 17.0 23.3CRPBK 17.0 30.4 29.4BOB 23.9 28.9 30.7 ANDBK 21.527.8 26.4UNBK 18.6 26.6 23.1

    Source: Company, Angel Research, Note:3-year CAGR over FY08-FY11,

    5-year CAGR over FY2006-11

    Exhibit 11:Banks with lowest credit growthBank 1yr (%) 3year CAGR 5yr CAGRUCOBK 12.4 21.6 21.5YESBK 12.7 53.9 70.2CENTBK 12.7 21.1 28.2SBI 16.1 22.0 23.7ALLBK 16.6 23.5 26.3J&KBK 21.8 11.5 12.6 VIJAYA 36.415.4 23.9BOM 24.0 17.0 23.3SYNBK 18.9 18.6 24.0

    Source: Company, Angel Research, Note:3-year CAGR over FY08-FY11,

    5-year CAGR over FY2006-11

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    Sector Review | Banking

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    Asset quality broadly deteriorates; some PSU banks manage tobuck the trend

    Most PSU banks witnessed asset-quality stress and reported higher slippages

    (11 out of 21 PSU banks reporting more than a 20% qoq increase in theirNPA ratios) in 2QFY2012, primarily on account of completion of transition to

    system-based NPA recognition, however some banks managed to buck the trend

    by maintaining or sequentially improving their asset quality. Notably, banks that

    had already switched over to system-based NPA recognition before the mandated

    timeline of September 30, 2011, such as BOB, BOM, J&KBK and Vijaya Bank,

    witnessed improvement in their NPA ratios in 2QFY2012 compared to 1QFY2012.

    Also, few PSU banks particularly Dena Bank and PNB, though made substantial

    switchover (`50lakhs and below for Dena, `10lakhs and below for PNB) during

    2QFY2012, managed to surprise positively on the asset-quality front by reporting

    lower-than-expected slippages. Also, in cases of Allahabad Bank, Andhra Bank,

    Vijaya Bank and Central Bank, we were expecting a higher pressure on earnings

    from asset-quality deterioration, which did not happen in 2Q, though we would

    remain cautious regarding the same in the coming quarters.

    Exhibit 12:Broadly asset quality weakened for most banks under our coverageBank Slippage ratio2QFY12 (%) Slippage ratio1QFY12 (%) change(bps) Qoq changeNNPA (%) PCR2QFY12 (%) PCR1QFY12 (%) change(ppt) Switchover in2QFY12 ANDHBK 6.1 1.4 478 222.1 61.7 82.0 (20.3)`25lakhs and below

    OBC 6.3 1.6 469 86.8 63.8 75.1 (11.3) `10lakhs and below

    UNBK 4.8 2.0 279 56.3 60.5 68.2 (7.7) `5lakhs and below

    SYNBK 3.6 1.3 233 3.3 78.5 78.4 0.1 `25lakhs and below

    BOI 5.3 3.2 214 57.8 59.1 66.8 (7.6) `5lakhs and below

    CENTBK 3.8 1.8 199 62.2 56.8 65.2 (8.4) Above `10lakh

    IOB 3.6 1.7 182 19.6 71.8 73.5 (1.7) `50lakhs and below

    UTDBK 4.6 2.9 171 36.9 65.0 70.2 (5.2) `5lakhs and below

    CRPBK 2.4 0.7 164 81.0 84.7 74.9 9.8 Fully done

    ALLBK 2.2 0.6 158 12.8 79.6 79.9 (0.3)`50lakhs and below

    INDBK 2.0 0.9 114 42.1 79.4 84.1 (4.8) Fully done

    IDBI 2.4 1.6 77 26.4 70.1 74.0 (3.9) Fully done

    SBI 4.2 3.9 33 29.6 63.5 67.3 (3.8) Fully done

    DENABK 1.4 1.3 7 7.2 77.1 77.9 (0.8) `50lakhs and below

    UCOBK 2.1 2.1 2 (0.8) 52.0 51.6 0.4`

    50lakhs and belowBOB 1.0 1.0 (0) (0.7) 82.0 82.5 (0.5) Fully done

    CANBK 2.3 2.6 (26) 8.6 68.6 69.5 (0.9) `2lakhs and below

    PNB 1.6 1.9 (30) (0.1) 75.1 74.3 0.8 `10lakhs and below

    J&KBK 0.8 1.3 (56) 6.3 92.0 92.5 (0.5) Fully done

    BOM 0.8 1.6 (81) (46.5) 86.0 73.2 12.8 Fully done

    VIJAYA 3.7 5.0 (129) (8.6) 66.1 63.4 2.7 Fully do

    Source: Company, Angel Research

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    Apart from slippages arising due to the switchover to system-based NPA

    recognition, delinquencies from the SME and agri books further aggravated

    asset-quality pressures and led to higher provisioning expenses for most banks

    during 2QFY2012. While broadly asset quality deteriorated for PSU banks, privatebanks on the contrary, which have sharply improved their asset quality over the

    past two years, remained comfortable on the asset-quality front. Apart from some

    concerns from the MFI segment, which led to higher restructuring during

    2QFY2012 for ICICI Bank (~`740cr), Axis bank (~`230cr), Yes Bank (~`90cr)

    and South Indian Bank (`81cr), overall slippages remained contained for private

    banks under our coverage.

    Exhibit 13:Gross NPA trends (%) Pvt vs. PSU

    Source: Company, Angel Research

    Exhibit 14:Net NPA trends (%) Pvt vs. PSU

    Source: Company, Angel Research

    Exhibit 15:Gross NPA trend (%) for the banking industry

    Source: Company, Angel Research

    Exhibit 16:Net NPA trend (%) for the banking industry

    Source: Company, Angel Research

    2.963.19

    3.123.20

    3.06 2.892.65

    2.552.45

    2.322.53 2.56

    2.64 2.58 2.59 2.61

    2.712.96

    1.50

    1.80

    2.10

    2.40

    2.70

    3.00

    3.30

    3.60

    2QFY10

    3QFY10

    4QFY10

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    Pvt Banks PSU Banks

    1.311.39

    1.15

    1.05

    0.900.78

    0.62 0.62 0.59

    1.04

    1.22 1.26

    1.27 1.21 1.18 1.26 1.28

    1.53

    0.30

    0.50

    0.70

    0.90

    1.10

    1.301.50

    1.70

    2QFY10

    3QFY10

    4QFY10

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    Pvt Banks PSU Banks

    2.37

    2.46

    2.36

    2.432.47

    2.40

    2.27

    2.43

    2.73

    2.10

    2.20

    2.30

    2.40

    2.50

    2.60

    2.70

    2.80

    2QF

    Y10

    3QF

    Y10

    4QF

    Y10

    1QF

    Y11

    2QF

    Y11

    3QF

    Y11

    4QF

    Y11

    1QF

    Y12

    2QF

    Y12

    1.06

    1.16

    1.09 1.08 1.07

    1.00 0.98

    1.04

    1.28

    0.90

    1.00

    1.10

    1.20

    1.30

    1.40

    2QF

    Y10

    3QF

    Y10

    4QF

    Y10

    1QF

    Y11

    2QF

    Y11

    3QF

    Y11

    4QF

    Y11

    1QF

    Y12

    2QF

    Y12

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    November 24, 2011 8

    The incremental increase in base rates by banks, trailing the hikes in repo rates by

    the RBI over the past year (average increase of 250300bp in base rates), coupled

    with the slowdown in economic activity over the same period (more than 100bp

    drop in GDP) is likely to have made debt servicing more challenging forborrowers. With interest rates expected to remain high until the onset of FY2013

    and sectors such as infra, real estates and exports continuing to face macro

    headwinds, asset-quality concerns are expected to linger. However, that said,

    incremental provisioning expenses in the current fiscal by banks on account of

    switchover to system-based NPA recognition and to meet the increase in NPA

    prudential norms and the mandated provision coverage ratio of 70% have led to a

    high base. Hence, the percentage increase in actual provisioning expenses in the

    P&L is not expected to increase significantly, even though genuine slippages are

    expected to increase going forward.

    Exhibit 17:Movement in yields* PSU banksBank Yield onAssets(%)

    Prov. Cost toassets(%)Risk-adjustedyields(%)

    Slippageratio(%)PCR(%)

    CASAratio(%)Fee inc. toassets(%)

    FY2013EP/ABV(x)FY11-13E EPSCAGR(%)

    FY2013ERoE(%)PNB 8.8 0.8 8.0 1.6 75.1 37.1 0.87 1.00 9.9 20.6

    CANBK 8.5 0.5 8.1 2.3 68.6 25.8 0.74 0.82 (3.0) 17.2

    UNBK 8.4 0.9 7.7 4.8 60.5 32.1 0.65 0.78 5.2 17.0

    J&KBK 8.5 0.3 8.3 0.8 92.0 38.2 0.46 0.78 12.0 17.8

    INDBK 9.1 0.6 8.6 2.0 79.4 29.8 0.82 0.75 7.4 19.4

    UCOBK 8.7 1.0 7.9 2.1 52.0 26.3 0.44 0.68 15.9 16.7

    ALLBK 9.4 0.9 8.6 2.2 79.6 30.6 0.71 0.67 12.2 18.4

    ANDHBK 9.8 0.8 9.2 6.1 61.7 26.1 0.57 0.66 (1.0) 15.6

    SYNBK 8.9 1.0 8.0 3.6 78.5 30.5 0.58 0.64 11.8 16.3

    OBC 8.9 1.0 8.0 6.3 63.8 22.9 0.61 0.64 5.1 14.1

    CENTBK 8.8 0.8 8.2 3.8 56.8 32.8 0.43 0.63 (16.1) 13.9

    VIJAYA 8.9 0.8 8.3 3.7 66.1 23.0 0.50 0.63 3.6 11.7

    BOM 8.9 1.3 7.6 0.8 86.0 40.7 0.80 0.63 26.8 15.6

    CRPBK 8.5 0.5 8.2 2.4 84.7 21.8 0.75 0.59 1.5 16.6

    IDBI 9.1 0.6 8.5 2.4 70.1 19.2 0.67 0.59 12.3 14.0

    IOB 8.9 1.2 7.6 3.6 71.8 27.5 0.77 0.57 20.0 15.9

    UBI 8.4 1.1 7.5 4.6 65.0 39.9 0.48 0.51 12.4 14.0

    DENABK 8.9 0.4 8.5 1.4 77.1 35.6 0.66 0.45 7.5 16.4

    Source: Company, Angel Research; Note*: Yield on assets, Prov. cost to assets, Risk-adjusted yields to assets and fee income to assets as of 1HFY2012 for

    all banks. Tier-I ratio, CASA ratio, slippage ratio, PCR for all banks as of 2QFY2012, #FY2013 P/ABV without adjusting for SASF. Closing prices as of

    November 24, 2011

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    November 24, 2011 9

    Exhibit 18:Most banks comfortable on the capital adequacy frontBank Tier-I (%) Tier-II (%) CAR (%)FEDBK 14.0 1.0 15.1

    ICICIBK 13.1 5.9 19.0HDFCBK 11.4 5.1 16.5

    J&KBK 11.3 2.3 13.6

    SIB 10.8 2.7 13.5

    OBC 9.9 2.7 12.6

    INDBK 9.9 2.3 12.2

    YESBK 9.4 6.6 16.0

    DENABK 9.3 3.3 12.6

    VIJAYA 9.2 3.5

    CANBK 9.2 3.6 12.8

    UTDBK 8.9 4.0 13.0

    ALLBK 8.9 4.1

    BOB 8.8 3.9 12.7

    UCOBK 8.6 5.0 13.6

    SYNBK 8.6 3.3 11.9

    ANDBK 8.5 4.0

    UNBK 8.5 4.0 12.5

    AXSB 8.5 2.9

    PNB 8.4 3.9 12.2

    BOI 8.3 3.7 12.0

    CRPBK 8.2 5.4 13.6

    CENTBK 7.9 4.9 12.8

    IDBI 7.8 5.6 13.3

    SBI 7.5 3.9 11.4

    BOM 7.1 4.8 11.9

    IOB 7.0 5.4 12.4

    Source: Company, Angel Research

    Fee income growth for banks moderates during 1HFY2012

    Fee income performance of banks under our coverage was moderate in

    1HFY2012, registering growth of 8.7% qoq and 13.4% yoy. Compared to FY2011,most banks witnessed a decline in fee income to average assets in 1HFY2012

    (average of ~10bp for our coverage universe), in-line with the drop in credit

    growth over the last six months. Some of the mid-sized banks who revised their fee

    charges such as BOM and UBI outperformed in terms of change in their fees as %

    of average total assets. On the other hand, IOBs high fee growth was attributable

    to unsustainably high credit growth, while others like Indian and Central Bank had

    non core elements (income tax refund in case of Indian Bank and strong recoveries

    for Central Bank of India). Otherwise, generally several banks including large Pvt

    and PSU Banks saw modest fee income performance.

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    Exhibit 19:Other income (excl. treasury) performance for banks under our coverageBank Fee income2QFY12 Fee income1QFY12 % chg (qoq) Fee income2QFY11 % chg (yoy) Fee inc toassets (%) FY2011 Fee inc toassets (%) 1HFY2012 Diff.BOM 1,470 1,644 (10.6) 1,088 35.0 0.63 0.80 0.17

    IOB 3,781 3,544 6.7 2,598 45.5 0.72 0.77 0.05

    OBC 2,591 2,522 2.8 2,133 21.5 0.59 0.61 0.02

    SYNBK 2,324 2,334 (0.4) 2,295 1.3 0.60 0.58 (0.01)

    BOI 6,874 5,504 24.9 5,485 25.3 0.74 0.70 (0.04)

    UTDBK 1,147 1,032 11.1 1,004 14.3 0.53 0.48 (0.04)

    VIJAYA 997 1,144(12.9) 937 6.4 0.55 0.50 (0.04)

    BOB 7,242 5,669 27.8 5,712 26.8 0.74 0.69 (0.05)

    CENTBK 2,794 1,779 57.1 2,025 38.0 0.49 0.43 (0.06)

    CANBK 6,793 6,038 12.5 4,980 36.4 0.82 0.74 (0.08)

    UNBK 4,009 3,710 8.1 3,786 5.9 0.73 0.65 (0.08)

    SIB 42 37 13.8 39 8.0 0.54 0.45 (0.09)ICICIBK 1,820 1,668 9.1 1,722 5.7 1.74 1.65 (0.10)

    INDBK 3,213 2,023 58.8 2,637 21.9 0.93 0.82 (0.11)

    UCOBK 1,618 1,904 (15.0) 2,143 (24.5) 0.55 0.44 (0.11)

    PNB 7,839 9,097 (13.8) 6,583 19.1 0.98 0.87 (0.11)

    J&KBK 627 569 10.3 563 11.4 0.59 0.46 (0.13)

    CRPBK 2,755 2,554 7.9 2,217 24.3 0.87 0.75 (0.13)

    IDBI 4,331 4,079 6.2 5,292 (18.2) 0.81 0.67 (0.14)

    DENABK 1,094 1,230 (11.0) 1,190 (8.1) 0.79 0.66 (0.14)

    AXSB 1,207 1,09810.0 925 30.5 2.02 1.87 (0.15)

    HDFCBK 1,213 1,161 4.4 1,013 19.8 1.77 1.60 (0.17)

    ALLBK 3,022 2,59916.3 3,077 (1.8) 0.89 0.71 (0.17)

    SBI 3,399 3,365 1.0 3,813 (10.8) 1.28 1.10 (0.19)

    ANDHBK 1,557 1,576(1.2) 1,731 (10.1) 0.76 0.57 (0.19)

    FEDBK 103 101 2.0 130 (20.8) 0.99 0.75 (0.24)

    Source: Company, Angel Research

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    November 24, 2011 11

    Outlook and valuation

    The broad lending and deposit rates seem to have settled down. Further, with the

    RBI indicating a pause in monetary tightening at least for the next policy review, we

    expect margins of banks to remain at relatively similar levels for the next twoquarters, as witnessed in 2QFY2012. However, leftover upward deposit re-pricing

    coupled with increased saving deposit rates in cases of some banks could result in

    marginal NIM contraction.

    With interest rates having been at the higher-end for quite some time now and

    macro headwinds continuing to hit sectors such as power, textile and real estate

    where banks have significant exposures material asset-quality concerns have

    started to emerge. While NPA ratios of most PSU banks were expected to

    deteriorate during 2QFY2012 on account of switchover to system-based NPA

    recognition, fresh slippages from agri-based and SME segments and

    uncharacteristically higher NPAs from metals and exports-oriented sectors resultedin higher-than-estimated provisioning expenses for most banks under our

    coverage.

    Accordingly, we prefer banks with a more conservative asset-quality profile,

    especially amongst mid caps (for instance, relatively lower yield on advances and

    moderate credit growth) this includes banks such as Syndicate Bank and Bank of

    Maharashtra. Also, from a medium-term perspective, we continue to prefer large

    private banks with a strong structural investment case within which we prefer Axis

    Bank and ICICI Bank from a valuation perspective.

    Exhibit 20:PSU banks price band (P/ABV)*

    Source: C-line, Angel Research, Note:* For PSU banks , excl. SBI and IDBI

    Exhibit 21:Large Pvt. banks price band (P/ABV)

    Source: Company, Angel Research

    -

    0.20

    0.40

    0.60

    0.80

    1.00

    1.20

    1.40

    1.60

    1.80

    Apr-01

    Nov-0

    1

    Jun-0

    2

    Jan-0

    3

    Aug-0

    3

    Mar-04

    Oct-04

    May-0

    5

    Dec-0

    5

    Jul-06

    Feb-0

    7

    Sep-0

    7

    Apr-08

    Nov-0

    8

    Jun-0

    9

    Jan-1

    0

    Aug-1

    0

    Mar-11

    Oct-11

    -

    0.50

    1.00

    1.50

    2.00

    2.50

    3.00

    3.50

    4.00

    Apr-01

    Nov-0

    1

    Jun-0

    2

    Jan-0

    3

    Aug-0

    3

    Mar-04

    Oct-04

    May-0

    5

    Dec-0

    5

    Jul-06

    Feb-0

    7

    Sep-0

    7

    Apr-08

    Nov-0

    8

    Jun-0

    9

    Jan-1

    0

    Aug-1

    0

    Mar-11

    Oct-11

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    November 24, 2011 12

    Sector-wise performance

    Exhibit 22:Large PSUs P&LParameter 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)NII 23,090 21,489 7.5 19,539 18.2

    Other Income 7,701 7,361 4.6 7,565 1.8

    Operating Profit 30,791 28,849 6.7 27,103 13.6

    Operating Expenses 13,293 12,452 6.8 12,038 10.4

    Pre provision profit 17,497 16,398 6.7 15,065 16.1

    Provisions &Contingencies

    7,230 7,207 0.3 5,049 43.2

    PBT 10,267 9,190 11.7 10,017 2.5

    Tax 2,874 3,426 (16.1) 3,064 (6.2)

    Net Profit 7,393 5,764 28.3 6,952 6.3

    Source: Company, Angel Research

    Exhibit 23:Mid PSUs P&LParameter 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)NII 13,200 12,097 9.1 11,620 13.6

    Other Income 3,406 3,350 1.7 2,978 14.4

    Operating Profit 16,606 15,447 7.5 14,598 13.8

    Operating Expenses 7,235 6,801 6.4 6,547 10.5

    Pre provision profit 9,370 8,646 8.4 8,051 16.4

    Provisions &Contingencies

    4,351 3,580 21.5 3,144 38.4

    PBT 5,019 5,066 (0.9) 4,908 2.3

    Tax 1,202 1,286 (6.5) 1,356 (11.3)

    Net Profit 3,817 3,780 1.0 3,552 7.5

    Source: Company, Angel Research

    Exhibit 24:New Pvt. P&LParameter 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)NII 8,868 8,295 6.9 7,501 18.2

    Other Income 4,852 4,540 6.9 4,049 19.8

    Operating Profit 13,720 12,835 6.9 11,550 18.8

    Operating Expenses 6,366 5,986 6.3 5,174 23.0

    Pre provision profit 7,354 6,849 7.4 6,375 15.4

    Provisions &Contingencies

    1,173 1,142 2.7 1,594 (26.4)

    PBT 6,181 5,707 8.3 4,781 29.3

    Tax 1,870 1,699 10.1 1,394 34.2

    Net Profit 4,311 4,008 7.6 3,388 27.3

    Source: Company, Angel Research

    Exhibit 25:Old Pvt. P&LParameter 2QFY12 1QFY12 % chg(qoq) 2QFY11 % chg(yoy)NII 1,779 1,614 10.2 1,493 19.1

    Other Income 636 624 1.9 674 (5.8)

    Operating Profit 2,414 2,238 7.9 2,168 11.4

    Operating Expenses 1,238 1,114 11.1 1,053 17.6

    Pre provision profit 1,176 1,124 4.7 1,115 5.5

    Provisions &

    Contingencies

    210 336 (37.3) 404 (48.0)

    PBT 966 788 22.5 711 35.8

    Tax 286 204 40.2 195 46.3

    Net Profit 680 584 16.4 516 31.8

    Source: Company, Angel ResearchExhibit 26:DuPont analysis 1HFY2012 vs. FY2011

    Large PSU Mid PSU New Pvt Old Pvt Grand TotalParameter FY2011 1HFY2012 FY2011 1HFY2012 FY2011 1HFY2012 FY2011 1HFY2012 FY2011 1HFY2012NII 2.8 2.8 2.8 2.7 3.1 3.0 2.9 2.8 2.8 2.8

    (-) Prov. Exp. 0.7 0.9 0.7 0.8 0.6 0.4 0.6 0.4 0.7 0.8 Adj NII 2.1 1.9 2.1 1.9 2.5 2.6 2.3 2.3 2.2 2.0

    Other Inc. 1.1 1.0 0.8 0.7 1.8 1.7 1.2 1.0 1.1 1.0

    Op. Inc. 3.2 2.8 2.9 2.6 4.3 4.3 3.5 3.4 3.3 3.0

    Opex 1.8 1.6 1.7 1.5 2.2 2.2 2.0 1.9 1.8 1.7

    PBT 1.4 1.2 1.2 1.1 2.1 2.1 1.5 1.4 1.5 1.3

    Taxes 0.5 0.4 0.3 0.3 0.6 0.6 0.4 0.4 0.5 0.4

    RoA 0.9 0.8 0.9 0.8 1.5 1.5 1.0 1.0 1.0 0.9Leverage 19.6 19.2 21.0 19.6 10.5 10.7 13.4 13.3 17.2 16.8

    RoE 18.7 15.9 18.4 15.9 15.7 15.8 13.9 13.8 17.6 15.8Source: Company, Angel Research

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    Banking indicators watchExhibit 27:Credit and deposit growth trends

    Source: RBI, Angel Research

    Exhibit 28:Investment-deposit ratio

    Source: RBI, Angel Research

    Exhibit 29:LAF borrowings high over the last fortnight

    Source: RBI, Angel Research

    Exhibit 30:Wholesale rates remain steady

    Source: Bloomberg, Angel Research

    Exhibit 31:Forex reserves

    Source: RBI, Angel Research

    Exhibit 32:ECB demand picks up on rate differential

    Source: RBI, Angel Research

    -

    5.0

    10.0

    15.0

    20.0

    25.0

    30.0

    Oct-08

    Jan-0

    9

    Apr-09

    Jul-09

    Oct-09

    Jan-1

    0

    Apr-10

    Jul-10

    Oct-10

    Jan-1

    1

    Apr-11

    Jul-11

    Oct-11

    Credit growth (%) Depos it growth (% )

    27.0

    28.0

    29.0

    30.0

    31.0

    32.0

    70.0

    72.0

    74.0

    76.0

    78.0

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    Oct-11

    Credit-to-Deposit ratio (%) Inv-to-Dep ratio (% , RHS)

    (2,000)

    (1,500)

    (1,000)

    (500)

    -

    500

    1,000

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    Oct-11

    Nov-1

    1

    (` bn)

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    Oct-11

    Nov-1

    1

    CP 3M CP 12M

    -

    80

    160

    240

    320

    400

    Sep-1

    0

    Oct-10

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    Oct-11

    Nov-1

    1

    (US$ Bn)

    1.1

    3.1

    0.81.1

    3.4

    2.7

    1.4

    5.6

    2.1 2.7

    3.3

    4.23.7

    -

    1.0

    2.0

    3.0

    4.0

    5.0

    6.0

    Aug-1

    0

    Sep-1

    0

    Oct-10

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    (US$ bn)

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    November 24, 2011 14

    Exhibit 33:Corporate and government bond yields

    Source: Bloomberg, Angel Research

    Exhibit 34:G-sec yields indicating close to cyclical peak

    Source: Bloomberg, Angel Research

    Lending and deposit rates

    Exhibit 35:Lending (average base rate) watchBank Current (%) 3m ch. (bp) 6m ch. (bp) 1yr ch. (bp) AXSB 10.00 19 102 240

    BOB 10.00 19 95 250

    BOI 10.00 19 85 225

    CANBK 10.00 4 56 225

    HDFCBK 10.75 - 81 225

    ICICIBK 10.75 - 83 225

    IDBI 10.75 - 83 225

    PNB 10.75 - 81 225

    SBI 10.75 11 85 225

    UNBK 10.75 - 81 225

    Source: Company, Angel Research

    Exhibit 36:Peak retail FD rate in 1-3 years maturityBank Current (%) over 2QFY12 over 1QFY12 over 2QFY11 AXSB 9.25 - -

    BOB 9.35 - 35 210

    BOI 9.25 - - 150

    CANBK 9.25 - - 200

    HDFCBK 9.25 - - 175

    ICICIBK 9.25 - - 150

    IDBI 9.50 - - 175

    PNB 9.40 - 25 215

    SBI 9.25 - - 200

    UNBK 9.25 - - 200

    Source: Company, Angel Research; Note: all changes in bp

    Sectoral distribution of credit

    Exhibit 37:Credit growth driven by industry and services sectorSector Sep 2010 Sep 2011(` cr) % of total (` cr) % of total % chg (yoy) Agriculture 401,93312.6 433,791 11.4 7.9

    Industry 1,417,200 44.3 1,742,163 45.9 22.9

    - Micro & Small 213,741 6.7 242,991 6.4 13.7

    - Medium 148,768 4.7 195,666 5.2 31.5

    - Large 1,054,691 33.0 1,303,507 34.3 23.6

    Services 764,823 23.9 912,413 24.0 19.3

    Personal Loans 615,195 19.2 708,526 18.7 15.2

    - Housing 317,150 9.9 366,889 9.7 15.7

    - Vehicle 70,374 2.2 83,981 2.2 19.3

    Non-food Credit 3,199,151 100 3,796,893 100 18.7Source: RBI, Angel Research

    9.6

    6

    9.6

    0

    9.6

    6

    9.7

    4

    8.7

    0

    8.8

    4

    8.8

    7

    8.8

    8

    9.8

    3

    9.7

    4

    9.7

    2

    9.7

    4

    8.2

    9

    8.4

    9

    8.4

    8

    8.4

    1

    7.0

    7.5

    8.0

    8.5

    9.0

    9.5

    10.0

    AAA 1 YrAAA 3 YrAAA 5 YrAAA 10 YrGsec 1YrGsec 5YrGsec 7YrGsec 10Yr

    31-Oct-11 31-May-11(%)

    4.5

    5.5

    6.5

    7.5

    8.5

    9.5

    (1.0)

    -

    1.0

    2.0

    3.0

    4.0

    Jun-0

    5

    Jan-0

    6

    Aug-0

    6

    Mar-07

    Oct-07

    May-0

    8

    Dec-0

    8

    Jul-09

    Feb-1

    0

    Sep-1

    0

    Apr-11

    Nov-1

    1

    G-Sec 1Yr and 10Yr Spread (%) Repo Rate (%, RHS)

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    November 24, 2011 15

    Industry-wise distribution of credit

    Exhibit 38:Strong growth being witnessed in metalsIndustry

    Sep 2010 Sep 2011(` cr) % of total (` cr) % of total % chg (yoy)

    Infrastructure 469,621 33.1 564,958 32.4 20.3

    Metals 176,306 12.4 230,161 13.2 30.5

    Textiles 123,764 8.7 145,482 8.4 17.5

    Engineering 82,987 5.9 101,632 5.8 22.5

    Chemicals 88,348 6.2 96,670 5.5 9.4

    Food Processing 68,153 4.8 85,516 4.9 25.5

    Oil and Gas 57,098 4.0 64,062 3.7 12.2

    Construction 42,661 3.0 50,977 2.9 19.5

    Vehicles 40,9152.9 50,097 2.9 22.4

    Gems & Jewellery 33,962 2.4 46,786 2.7 37.8

    Other Industries 233,384 16.5 305,823 17.6 31.0

    Total 1,417,199 100 1,742,164 100 22.9Source: RBI, Angel Research

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    November 24, 2011 16

    Valuation watch

    Exhibit 39:Private banks P/ABV trends*

    Source: Company, Angel Research; Note: Private banks under our coverage

    Exhibit 40:Public sector banks P/ABV trends

    Source: Company, Angel Research

    Exhibit 41:Large private banks P/ABV trends

    Source: Company, Angel Research

    Exhibit 42:Large public sector banks P/ABV trends

    Source: Company, Angel Research

    Exhibit 43:Small private banks P/ABV trends*

    Source: Company, Angel Research; Note: Small pvt. banks under our coverage

    Exhibit 44:Mid-cap* public sector banks P/ABV trends

    Source: Company, Angel Research, Note*:Mid and small PSU banks

    0.60

    1.00

    1.40

    1.80

    2.20

    2.60

    3.00

    3.40

    Mar-05

    Sep-0

    5

    Mar-06

    Sep-0

    6

    Mar-07

    Sep-0

    7

    Mar-08

    Sep-0

    8

    Mar-09

    Sep-0

    9

    Mar-10

    Sep-1

    0

    Mar-11

    Sep-1

    1

    P/ABV Median 15th percentile 85th percentile

    0.50

    0.80

    1.10

    1.40

    1.70

    2.00

    Mar-05

    Aug-0

    5

    Jan-0

    6

    Jun-0

    6

    Nov-0

    6

    Apr-07

    Sep-0

    7

    Feb-0

    8

    Jul-08

    Dec-0

    8

    May-0

    9

    Oct-09

    Mar-10

    Aug-1

    0

    Jan-1

    1

    Jun-1

    1

    P/ABV Median 15th percentile 85th percentile

    0.60

    1.00

    1.40

    1.80

    2.20

    2.60

    3.00

    3.40

    Mar-05

    Sep-0

    5

    Mar-06

    Sep-0

    6

    Mar-07

    Sep-0

    7

    Mar-08

    Sep-0

    8

    Mar-09

    Sep-0

    9

    Mar-10

    Sep-1

    0

    Mar-11

    Sep-1

    1

    P/ABV Median 15th percentile 85th percentile

    0.70

    1.00

    1.30

    1.60

    1.90

    2.20

    Mar-05

    Aug-0

    5

    Jan-0

    6

    Jun-0

    6

    Nov-0

    6

    Apr-07

    Sep-0

    7

    Feb-0

    8

    Jul-08

    Dec-0

    8

    May-0

    9

    Oct-09

    Mar-10

    Aug-1

    0

    Jan-1

    1

    Jun-1

    1

    P/ABV Median 15th percentile 85th percentile

    0.30

    0.70

    1.10

    1.50

    1.90

    2.30

    Mar-05

    Sep-0

    5

    Mar-06

    Sep-0

    6

    Mar-07

    Sep-0

    7

    Mar-08

    Sep-0

    8

    Mar-09

    Sep-0

    9

    Mar-10

    Sep-1

    0

    Mar-11

    Sep-1

    1

    P/ABV Median 15th percentile 85th percentile

    0.30

    0.60

    0.90

    1.20

    1.50

    Mar-05

    Aug-0

    5

    Jan-0

    6

    Jun-0

    6

    Nov-0

    6

    Apr-07

    Sep-0

    7

    Feb-0

    8

    Jul-08

    Dec-0

    8

    May-0

    9

    Oct-09

    Mar-10

    Aug-1

    0

    Jan-1

    1

    Jun-1

    1

    P/ABV Median 15th percentile 85th percentile

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    November 24, 2011 17

    Economy watch

    Exhibit 45:Quarterly GDP trends

    Source: CSO, Angel Research

    Exhibit 46:IIP trends

    Source: MOSPI, Angel Research

    Exhibit 47:Monthly WPI inflation trends

    Source: MOSPI, Angel Research

    Exhibit 48:Manufacturing and services PMI

    Source: Markit, Angel Research

    Exhibit 49:Exports and imports growth trends

    Source: Bloomberg, Angel Research

    Exhibit 50:Eight core industry growth rates for September

    Source: Bloomberg, Angel Research

    7.5

    6.15.8

    6.3

    8.6

    7.3

    9.4

    8.8 8.9

    8.37.8 7.7

    5.0

    6.0

    7.0

    8.0

    9.0

    10.0

    2QFY09

    3QFY09

    4QFY09

    1QFY10

    2QFY10

    3QFY10

    4QFY10

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    (%) 11.4

    6.4

    8.17.5

    6.7

    9.4

    5.36.2

    9.5

    3.8 3.6

    1.9

    -

    2.0

    4.0

    6.0

    8.0

    10.0

    12.0

    Oct-10

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    (%)

    8.2

    9.5 9.5 9.59.7 9.7

    9.6 9.59.4

    9.8 9.7 9.7

    7.0

    7.5

    8.0

    8.5

    9.0

    9.5

    10.0

    Nov-1

    0

    Dec-10

    Jan-11

    Feb-11

    Mar-11

    Apr-11

    May-11

    Jun-11

    Jul-11

    Aug-11

    Sep-11

    Oct-11

    (%)

    48.0

    50.0

    52.0

    54.0

    56.0

    58.0

    60.0

    62.0

    Oct-10

    Nov-1

    0

    Dec-10

    Jan-11

    Feb-11

    Mar-11

    Apr-11

    May-11

    Jun-11

    Jul-11

    Aug-11

    Sep-11

    Oct-11

    Mfg. PMI Services PMI

    (15.0)

    -

    15.0

    30.0

    45.0

    60.0

    75.0

    90.0

    Oct-10

    Nov-1

    0

    Dec-1

    0

    Jan-1

    1

    Feb-1

    1

    Mar-11

    Apr-11

    May-1

    1

    Jun-1

    1

    Jul-11

    Aug-1

    1

    Sep-1

    1

    Exports growth Imports growth(%

    2.3

    -17.8

    0.1

    -6.4

    4.4

    -2.1

    6.6

    0.9

    8.9

    -20

    -15

    -10

    -5

    0

    5

    10

    OverallIndex

    Coal

    Crude

    Oil

    NaturalGas

    Refinery

    Products

    Fertilizers

    Steel

    Cement

    Electricity

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    Exhibit 51:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2013EP/ABV (x) FY2013ETgt P/ABV (x) FY2013EP/E (x) FY2011-13EEPS CAGR (%) FY2013ERoA (%) FY2013ERoE (%) AxisBk Buy 937 1,32241.1 1.52 2.2 8.2 17.7 1.5 20.0

    FedBk Buy 340 407 19.7 0.92 1.1 6.9 19.5 1.2 14.0

    HDFCBk Accumulate 427 489 14.7 2.88 3.3 14.9 30.5 1.7 20.9

    ICICIBk* Buy 727 1,027 41.3 1.33 1.9 10.7 23.3 1.4 15.4

    SIB Accumulate 21 22 9.5 1.00 1.1 5.9 15.6 1.0 18.2

    YesBk Buy 264 316 19.4 1.67 2.0 8.8 19.9 1.3 20.8

    AllBk Neutral 147 -- 0.67 - 3.9 12.2 1.0 18.4

    AndhBk Neutral 96 -- 0.66 - 4.3 (1.0) 0.9 15.6

    BOB Buy 696 845 21.3 0.95 1.2 4.9 14.2 1.2 20.7

    BOI Neutral 325 - - 0.96 - 5.6 13.4 0.7 16.9

    BOM Buy 45 54 19.5 0.63 0.8 4.6 26.8 0.6 15.6

    CanBk Buy 418 510 22.0 0.82 1.0 4.9 (3.0) 0.9 17.2CentBk Neutral 87 - - 0.63 - 4.4 (16.1) 0.5 13.9

    CorpBk Buy 357 438 22.7 0.59 0.7 3.6 1.5 0.8 16.6

    DenaBk Neutral 62 - - 0.45 - 2.9 7.5 0.8 16.4

    IDBI# Neutral 91 - - 0.59 - 4.3 12.3 0.7 14.0

    IndBk Accumulate 189 208 10.4 0.75 0.8 4.2 7.4 1.3 19.4

    IOB Accumulate 91 103 14.0 0.57 0.7 3.6 20.0 0.6 15.9

    J&KBk Neutral 742 - - 0.78 - 4.7 12.0 1.3 17.8

    OBC Accumulate 266 291 9.4 0.64 0.7 4.7 5.1 0.8 14.1

    PNB Accumulate 885 1,017 15.0 1.00 1.2 5.2 9.9 1.1 20.6

    SBI* Buy 1,654 2,12728.6

    1.30 1.7 7.1 33.9 0.9 20.0SynBk Buy 96 119 24.2 0.64 0.8 4.2 11.8 0.7 16.3

    UcoBk Neutral 58 - - 0.68 - 3.5 15.9 0.7 16.7

    UnionBk Buy 206 238 15.5 0.78 0.9 4.7 5.2 0.8 17.0

    UtdBk Buy 57 70 22.3 0.51 0.6 3.4 12.4 0.6 14.0

    VijBk Neutral 50 -- 0.63 - 5.3 3.6 0.4 11.7

    Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF, CMP as of 24th Nov

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    November 24, 2011 19

    Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

    DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

    such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

    referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

    risks of such an investment.

    Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

    investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

    document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

    Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

    trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

    fundamentals.

    The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

    This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

    redistributed or passed on, directly or indirectly.

    Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

    other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

    the past.

    Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

    connection with the use of this information.

    Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment positions in the stocks recommended in this report.

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    November 24, 2011 20

    Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

    Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

    Disclosure of Interest Statement

    Analyst ownership Angel and its Group companies Angel and its Group companies' Broking relationshipof the stock ownership of the stock Directors ownership of the stock with company covered

    Axis Bank No Yes Yes NFedral Bank No No No No

    HDFC Bank No No No No

    ICICI Bank No No No No

    SIB No No No No

    Yes Bank No No No No

    Allahabad Bank No No No No

    Andhra Bank No No No N

    Bank of Baroda No No No No

    Bank of India No No No No

    Bank of Maharashtra No No No No

    Canara Bank No No No NoCentral Bank No No No No

    Corporation Bank No No No No

    Dena Bank No No No No

    IDBI No No No No

    Indian Bank No No No No

    IOB No No No No

    J&K Bank No No No No

    OBC No No No No

    PNB No No No No

    SBI No No Yes No

    Syndicate Bank No No No No

    UCO Bank No No No No

    Union Bank No No No No

    United Bank of India No No No No

    Vijaya Bank No No No N

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    6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai- 400 093. Tel: (022) 39357800Research Team

    Fundamental:

    Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

    Vaibhav Agrawal VP-Research, Banking [email protected]

    Shailesh Kanani Infrastructure [email protected]

    Srishti Anand IT, Telecom [email protected]

    Bhavesh Chauhan Metals & Mining [email protected]

    Sharan Lillaney Mid-cap [email protected]

    V Srinivasan Research Associate (Cement, Power) [email protected]

    Yaresh Kothari Research Associate (Automobile) [email protected]

    Shrinivas Bhutda Research Associate (Banking) [email protected]

    Sreekanth P.V.S Research Associate (FMCG, Media) [email protected]

    Hemang Thaker Research Associate (Capital Goods) [email protected]

    Nitin Arora Research Associate (Infra, Real Estate) [email protected]

    Ankita Somani Research Associate (IT, Telecom) [email protected]

    Varun Varma Research Associate (Banking) [email protected]

    Saurabh Taparia Research Associate (Cement, Power) [email protected]

    Technicals:

    Shardul Kulkarni Sr. Technical Analyst [email protected]

    Sameet Chavan Technical Analyst [email protected]

    Derivatives:

    Siddarth Bhamre Head - Derivatives [email protected]

    Institutional Sales Team:

    Mayuresh Joshi VP - Institutional Sales [email protected]

    Hiten Sampat Sr. AVP - Institutional Sales [email protected]

    Meenakshi Chavan Dealer [email protected]

    Gaurang Tisani Dealer [email protected]

    Akshay Shah Dealer [email protected]

    Production Team:

    Simran Kaur Research Editor [email protected]

    Dilip Patel Production [email protected]