india research financials sector update bse sensex: … · 5 | october 2011 idfc securities exhibit...

A series of interest rate hikes, global economic weakness and worries on domestic growth have soured the pitch for financials. A difficult operating environment is bound to manifest in muted credit growth, lower NIMs and worsening asset quality - leading to a sharp de-rating of bank stocks (down 9% vis-à-vis Sensex in two months). To ascertain what stocks are pricing in, we have conducted a sensitivity analysis based on Gordon Growth Model assuming a stable cost of capital at current levels. Our analysis reveals that the market is building in steep profitability erosion (up to 70bp decline in RoA) due to a rise in gross NPAs (to 5-8%) and further margin decline of 25-30bp. However, we believe the margin contraction is largely behind (~15bp decline in FY12E). Also, we see banking system NPAs+restructured assets peaking at 7.8% in FY13 vis-à-vis 5.8% now (refer our asset quality report dated 2 August 2011). With bulk of the stress likely to be restructured, associated credit costs would be minimal. While global uncertainties remain an overhang, any whiff of easing interest rates would trigger a rebound in financials, led by large cap sector bell-weathers. However, we believe higher beta stocks with maximum skepticism on profitability and highest discount to long-term valuations will outperform over 12-18 months.

Headwinds do exist but concerns seem overdone…: Given a sluggish domestic economy as also global uncertainties, we expect the RBI to pause after another 25bp hike in policy rates (if any). Peaking of the rate cycle and seasonal pick-up in credit would bode well for NIMs. For FY12, we see a ~15bp decline with a milder dent for private banks (~7bp) than PSU peers (~20bp). Also, we see banking system NPAs + restructured assets peaking at 7.8% in FY13 vs. 5.8% now.

…and valuations discounting exaggerated negatives: Financials have corrected sharply on concerns of higher interest rates (lower credit growth and NIMs) and slower economic growth (asset quality deterioration). Using the Gordon Growth Model, we evaluate what stock prices are building in. Our analysis reveals that the market expects steep profitability erosion for banks, primarily led by a spike in credit costs. The market implicitly estimates a 2-3x rise in banks’ NPA ratios and 20-70bp rise in credit costs over the next two years.

High-beta stocks should outperform as the cycle turns: With stocks trading at a discount to historical averages, the risk-reward is favorable. Though near term overhang of a global crisis remains, we see a sharp rebound in banking stocks in next 12 months as interest rates peak. We recommend shifting to higher beta stocks to play the upturn. Our preferred picks are Union Bank (23% discount in valuations and 45bp disbelief on RoA), Canara Bank (27% and 90bp), PNB (16% and 65bp), OBC (25% and 54bp), Axis Bank (23% and 34bp), Yes Bank (27% and 28bp) and ING Vysya Bank (14% and 37bp).

Comparative valuations Companies Recommendation Price Mkt cap TP Earnings CAGR EPS* P/E* P/Adj BV* RoE* RoA* (Rs) (Rs bn) (Rs) FY11-13E (%) (Rs) (x) (x) (%) (%) Union Bank Outperformer 230 120 415 26.5 51.2 4.5 1.0 22.2 1.0 Canara Bank Outperformer 459 203 650 18.4 102.7 4.5 1.0 22.8 1.2 PNB Outperformer 973 308 1350 20.4 166.3 5.8 1.3 23.6 1.3 OBC Outperformer 301 88 470 22.0 59.9 5.0 0.8 14.8 1.0 Axis Bank Outperformer 1,103 453 1700 25.0 103.4 10.7 2.0 20.5 1.6 ING Vysya Bank Outperformer 313 46 480 33.0 35.5 8.8 1.2 13.4 1.0 Yes Bank Outperformer 283 98 440 33.0 28.3 10.0 2.1 23.3 1.4 Source: IDFC Securities Research, * For FY12E

Indian Financials What are the stock prices saying?

INSTITUTIONAL SECURITIES

INDIA RESEARCH FINANCIALS SECTOR UPDATE BSE SENSEX: 17025 17 OCTOBER 2011

For Private Circulation only. Important disclosures appear at the back of this report”

SEBI Registration Nos.: INB23 12914 37, INF23 12914 37, INB01 12914 33, INF01 12914 33.

Pathik Gandotra

[email protected] 91-22-6622 2525

Chinmaya Garg


Kavitha Rajan


2 | OCTOBER 11 IDFC SECURITIES

Content

Investment Argument ................................................................................................ 3

Financials stocks: Pricing in overstressed concerns ..............................................3

We see the glass as half-full ....................................................................................6

In adversity lies opportunity .....................................................................................9

Companies.............................................................................................................. 12

Allahabad Bank..........................................................................................................13

Bank of Baroda ..........................................................................................................15

Bank of India ..............................................................................................................17

Canara Bank ..............................................................................................................19

Corporation Bank.......................................................................................................21

Indian Bank ................................................................................................................23

OBC............................................................................................................................25

Punjab National Bank ................................................................................................27

State Bank of India.....................................................................................................29

Union Bank of India....................................................................................................31

Axis Bank....................................................................................................................33

HDFC Bank ................................................................................................................35

ICICI Bank ..................................................................................................................37

IndusInd Bank ............................................................................................................41

ING Vysya Bank .........................................................................................................43

Yes Bank ....................................................................................................................45


INVESTMENT ARGUMENT Financials have corrected sharply, to below their long-term averages, on concerns

of deteriorating asset quality and muted credit growth

Our analysis based on the Gordon growth model indicates that stocks are building in a 2-3x rise in banks’ NPAs and 20-70bp rise in credit costs over the next two years

We believe concerns are overdone; we estimate ‘gross NPAs plus restructured assets’ for the system to peak at 7.8% in FY13

Expect margins of our coverage universe to decline by ~15bp, with private banks being better placed than PSU peers (~7bp yoy vis-à-vis ~20bp decline for PSU banks)

We expect stocks factoring in higher ‘disbelief’ and ‘deep valuations’ to offer the highest returns as the cycle turns

Financials stocks: Pricing in overstressed concerns

Banking stocks have reacted strongly to the concerns building up around asset quality and sluggish credit off-take. With high lending rates, stand-still corporate capex, slowing infrastructure investments, subdued retail loan demand and a weak global economy, system credit growth is expected to moderate in FY12. Further, the cyclical slowdown is sure to strain the repayment capability of various quarters, thereby raising a red flag on asset quality of banks.

Exhibit 1: Banks have underperformed Sensex since November 2010

Source: Bloomberg

Reeling under this barrage of negative news, financial stocks have corrected sharply by 21% YTD and underperformed the Sensex by 11%. The underperformance has been starker for PSU banks (down 16% YTD). Financial stocks in our coverage universe are now trading at a discount of up to ~20% to their 5-year trading averages. Nevertheless, valuations are still much ahead of the trough levels of FY09.

Absolute performance % since Nov-10

(50.0) (40.0) (30.0) (20.0) (10.0) - 10.0

Corp BankSBIOBCALBKCBKUnion BankBoIIndia BankING VysyaICICIBAxisBPNBBoBYes BankIIB

HDFCB

Relative performance % since Nov-10

(45.0) (30.0) (15.0) - 15.0 30.0

Corp Bank

SBI

OBC

ALBK

CBK

Union Bank

BoI

Indian Bank

ING Vysya

ICICIB

AxisB

PNB

BoB

Yes Bank

IIB

HDFCB

High lending rates, muted corporate capex and dull

retail loan demand among spate of headwinds…

…beating down financial stocks by ~20% YTD, with

PSU banks being the worst-hit


Exhibit 2: Bank valuations at a discount to long term averages

Source: Bloomberg

Assessing the implied profitability

While current valuations appear attractive, concerns around onset of a new NPA cycle and earnings deterioration have impelled investors to avoid increasing weights in Indian banks until the macro headwinds abate. While the prevalent concerns are justified, the magnitude of same is extremely exaggerated in our view. In this light, we attempt to put current valuations in perspective and assess what financial stocks are currently pricing in. We have conducted a sensitivity analysis using the Gordon Growth model and current trading multiples; our analysis reveals that banking stocks are factoring in a much lower RoE – implying a steep profitability erosion in the coming period. Our analysis assumes that interest rates have peaked and cost of capital would remain constant at current levels.

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Fears of the onset of a new NPA cycle beset

stocks, though valuations look attractive

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Exhibit 3: Implied RoE at current multiples

P/ BV (x) ROE (%) FY12 FY13 FY11A FY12 FY13 PSU Banks Bank of Baroda 1.3 1.1 25.5 14.8 13.0 Bank of India 1.1 0.9 17.8 14.3 12.6 Punjab National Bank 1.3 1.0 24.5 14.9 12.8 State Bank of India 1.2 1.0 12.6 13.3 11.8 Union Bank of India 1.0 0.8 20.9 12.0 10.6 OBC 0.8 0.7 17.0 10.7 9.7 Allahabad Bank 0.8 0.7 21.0 11.3 10.0 Canara Bank 1.0 0.8 26.4 12.5 10.9 Corporation Bank 0.7 0.6 21.9 10.1 9.2 Indian Bank 0.9 0.7 22.3 12.1 10.5 Pvt Banks Axis Bank 2.0 1.7 19.3 22.3 19.7 HDFC Bank 3.7 3.2 16.7 31.3 27.5 ICICI Bank 1.3 1.2 9.7 18.3 17.4 Yes Bank 2.1 1.7 21.1 24.2 20.7 IndusInd Bank 2.7 2.3 19.3 26.8 23.3 ING Vysya Bank 1.2 1.1 13.4 14.3 13.2

On the basis of the above determined implied RoEs, we ascertain the profitability or RoAs reflected in the stock prices at leverage levels of FY11. Stock prices, we believe, are factoring in an up to 70bp decline in RoAs from FY11.

Exhibit 4: Implied RoA at current multiples

Assets/ Equity (x) Implied RoA (%) FY11A FY11A FY12E FY13E Change over FY11-13E PSU Banks Bank of Baroda 21 1.33 0.71 0.62 (0.71) Bank of India 21 0.79 0.69 0.60 (0.19) Punjab National Bank 19 1.31 0.77 0.67 (0.65) State Bank of India 14 0.73 0.96 0.85 0.12 Union Bank of India 21 0.97 0.58 0.51 (0.45) OBC 21 1.01 0.52 0.47 (0.54) Allahabad Bank 21 1.04 0.54 0.48 (0.56) Canara Bank 25 1.34 0.50 0.44 (0.90) Corporation Bank 19 1.11 0.53 0.48 (0.63) Indian Bank 21 1.54 0.58 0.50 (1.03) Pvt Banks Axis Bank 16 1.60 1.43 1.26 (0.34) HDFC Bank 18 1.57 1.75 1.54 (0.03) ICICI Bank 15 1.34 1.25 1.18 (0.16) Yes Bank 17 1.52 1.45 1.24 (0.28) IndusInd Bank 19 1.43 1.39 1.21 (0.21) ING Vysya Bank 18 0.87 0.80 0.74 (0.13)

Gordon Growth analysis points to a steep erosion

in profitability…

Gordon Growth analysis points to a steep erosion

in profitability…


The market’s view of a gloomy outlook appears to be based on the following:

• A substantial decline in NIMs from levels witnessed in Q1FY12; and/ or

• RoA reduction is also assumed to be flowing from higher credit costs. The market implicitly builds in a 2-3x rise in banks’ NPA ratios and 20-70bp rise in credit costs over the next two years.

Bank of Baroda, Punjab National Bank and Union Bank among PSU banks, and Axis Bank and ICICI Bank among private ones are pricing in the steepest decline in profitability.

Exhibit 5: Summary of implied key metrics

Prov/ avg assets (%) Gross NPAs (%) NIM (%) FY11A FY12 FY13 FY11A FY12 FY13 FY11A FY12 FY13 PSU Banks Bank of Baroda 0.4 0.9 1.0 1.4 3.2 5.2 2.7 2.3 2.3 Bank of India 0.6 0.6 0.8 2.3 3.4 5.0 2.5 2.1 2.2 Punjab National Bank 0.7 1.3 1.5 1.7 4.2 7.0 3.5 3.2 3.2 State Bank of India 0.9 0.8 0.9 3.3 4.3 6.0 2.9 2.9 2.9 Union Bank of India 0.6 0.9 1.0 2.4 4.2 6.2 2.9 2.5 2.6 OBC 0.8 1.0 1.1 1.9 4.1 6.5 2.8 2.4 2.4 Allahabad Bank 0.8 1.3 1.4 1.8 4.1 6.6 2.9 2.8 2.7 Canara Bank 0.4 1.1 1.3 1.5 3.8 6.4 2.6 2.1 2.2 Corporation Bank 0.5 0.9 0.9 0.9 2.7 4.6 2.3 1.9 1.9 Indian Bank 0.6 1.5 1.7 1.0 4.3 8.0 3.6 3.1 3.2 PVT Banks Axis Bank 0.6 0.5 0.8 1.1 2.1 3.9 3.1 2.7 2.8 HDFC Bank 0.8 0.6 0.7 1.1 1.7 2.4 4.2 4.1 4.0 ICICI Bank 0.4 0.4 0.7 4.5 5.7 7.6 2.3 2.2 2.4 Yes Bank 0.2 0.1 0.4 0.2 0.2 0.9 2.6 2.4 2.4 IndusInd Bank 0.3 0.5 0.6 1.0 2.1 3.6 3.4 3.2 3.2 ING Vysya Bank 0.4 0.4 0.6 2.3 3.1 4.4 2.8 2.7 2.7

We see the glass as half-full

We concur that the two key headwinds for the sector are slower revenue growth (volumes and margins) and concerns on asset quality. However, we believe that the concerns are overstressed. On volumes, we have built in meaningful slowdown already. On margins, a large part of the contraction is likely behind. Banks with large wholesale funding are likely to witness some uptrend over the next couple of quarters, as lending rates have risen and wholesale funding costs have stabilized for the past three months. We also strive to gauge the extent of the asset quality damage and conclude that the stress would be manageable.

Expect a 15bp decline in NIMs in FY12

High systemic rates have driven a strong flow of deposits into the banking system. However, sluggish demand for credit, and thereby the sector’s declining loan-to-deposit ratio (43% YTD vs 83% in FY11), is bound to be a drag on NIMs. Nevertheless, deposits have been outpacing loan growth and we see wholesale deposit rates coming off over the next couple of quarters (already stable since past three months). Due to the higher funding costs, net interest margin for stocks under our coverage have declined by 20-30bp in the past two quarters. In H2FY12, margins should receive support from lower

Market pessimism triggered by substantial

dip in NIMs…

…and 2-3x rise in NPA ratios and 20-70bp rise in credit costs over the next

two years

Market concerns on slower revenue growth and asset quality are

overblown

Declining loan-to-deposit ratio to be a drag on NIMs


wholesale rates as also a seasonal pick-up in credit growth. Overall for FY12, we expect margins of our coverage universe to decline by ~15bp (vs the 25-30bp that is seemingly factored into CMPs). We see private banks better placed than PSU peers (~7bp yoy vis-à-vis ~20bp decline for PSU banks) owing to more aggressive rate hikes as also better ALM for the former.

Exhibit 6: Margin trends

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2.69

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3.2

(%)

All banks PSU Banks Private Banks

FY11 FY12E FY13E

Source: IDFC Securities Research and company reports

Asset quality stress appears to be manageable

Asset quality deterioration has been evident for PSU banks over the past two quarters. While higher slippages have been partially driven by transition to system recognition of NPAs, the sharp rise in interest rates and economic slowdown too has hit the underlying credit quality. Weak domestic as well as international demand, high commodity prices and dithering capital markets have impacted cash flows of borrowers, thereby raising the probability of loan defaults. While retail loans remain resilient on the back of rising wages, stress points are already visible on SME and agriculture portfolios. Agriculture portfolio is also facing stress due to ‘moral hazard’ – fallout of the government’s agriculture debt waiver scheme.

Exhibit 7: Banks’ gross NPAs have risen after moderation over FY05-08

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3.5Slippage (Rs bn - LHS) Slippage (% - RHS)

Source: The RBI and IDFC Securities Research

10% CAGR FY03-08

38% CAGR FY08-10

Private Banks’ better placed than PSU peers to tackle stress on NIM due

to better ALM

Retail loans seem resilient, but SME and agriculture segments

remain vulnerable


Exhibit 8: Continued stress in industry and agricultural portfolio over FY10-11

Source: The RBI and IDFC Securities Research

We assess ~17% of outstanding bank credit to be stressed

Applying credit screens (interest coverage and leverage ratios) indigenous to each segment of bank credit, we conclude ~17% of bank credit is under stress, of which a proportion is likely to manifest as NPAs or get restructured (see our report: ‘Asset Quality - That sinking feeling!’ dated August 2, 2011). Corporate portfolio emerges as the largest contributor to stress (~24% of sector) followed by agriculture (20%).

Exhibit 9: Identifying the pain points

Source: RBI, Capitaline, IDFC Securities Research

Exhibit 10: Significant proportion of stressed debt flows from corporate segment

Source: RBI, Capitaline, IDFC Securities Research

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SBI ICICI Bank PNB BoB BoI CBK UNBK

2010

NPA % in Industry sector

2011

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SBI ICICI Bank PNB BoB BoI CBK UNBK

2010 2011

Agriculture12%

Services16%

Retail loans19%

Industry48%

NBFC5% Stressed

17%

Non stressed83%

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Non stressed Stressed

17.3 Total bank credit

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% of credit under stress

17.3 Total bank credit

9.4 NBFC

20.0 Agriculture

8.8 Retail loans

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% of credit under stress

Sector (Rs bn) Outstanding Stressed % sectoral bank credit credit stressed creditCredit to industry (incl real estate) 17,606 4,161 23.6Retail loans 6,912 610 8.8Services (ex real estate & NBFCs) 5,990 506 8.5NBFCs 1,739 164 9.4Agriculture 4,527 905 20.0Total 36,774 6,347 17.3

4,161610

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Industrycredit

Retail loans Services NBFCs Agriculture Total

(Rs bn)

Corporate loans pose the biggest risk, followed by

agriculture


We see ‘restructured loans plus NPAs peaking at 7.8% in FY13

We believe that not all the stressed assets would convert into slippages (NPAs + restructured assets) and also that it would accrue to banks in a staggered manner over the next 2-3 years. Further, we believe that 60% of this incremental stress in likely to play out in FY12 as the impact of slower growth manifests. The remaining 40% is expected to spill over to FY13. In our base case scenario, we expect 50% of the stress to manifest over two years and NPAs + restructured loans to peak in FY13 at 7.8%. This scenario factors in peaking of inflation and interest rates over the next six months, led by softening commodity prices. Given the fact that we do not expect a broad-based recession in the economy, we expect maximum of these to get restructured and not slip into NPAs, which would limit the rise in credit costs for banks. We deduce that asset quality is under duress, but see the deterioration to be manageable.

Exhibit 11: Scenario analysis – gross NPAs to peak at 7.8% in FY13E in our base case

Base case Best case Worst case (50% of stressed debt) (25% of stressed debt) (75% of stressed debt) (Rs bn) FY12E FY13E FY12E FY13E FY12E FY13E Opening Gross NPAs 2,214 3,454 2,214 2,834 2,214 4,074 Allocation of incremental NPAs over yrs (%) 60.0 40.0 60.0 40.0 60.0 40.0 Additions 1,240 827 620 413 1,860 1,240 Closing Gross NPAs 3,454 4,280 2,834 3,247 4,074 5,314 Bank Credit 46,476 54,842 46,476 54,842 46,476 54,842 yoy growth (%) 18.0 18.0 18.0 18.0 18.0 18.0 Gross NPAs (%) 7.4 7.8 6.1 5.9 8.8 9.7 Source: RBI, IDFC Securities Research

In adversity lies opportunity

Reflecting the concerns around the NPA cycle and the global economic turmoil, financials stocks have corrected sharply since August 2011 - down 20% - and are trading at a discount to historical averages. We see current valuations adequately factoring in the risk of higher interest rates (lower credit growth and contraction in NIMs) as also slower economic growth (asset quality deterioration).

Historically, a strong rebound seen on normalization in macros

The previous downcycle of 2008 also saw a steep correction in financials stocks, triggered by an acute liquidity crunch in the global as well as domestic markets. Interest rates had increased rapidly and GDP growth plummeted to sub-6% levels. Stocks had touched lows of ~0.5x one-year forward book. At the time, stocks were pricing in NPAs of 10%+ for PSU banks and 8-10% for private banks (Axis Bank and ICICI Bank). However, there was a swift rebound seen in stock prices on the first signs of a decline in interest rates and easing of liquidity.

We expect interest rate and inflation to peak and

commodity prices to soften in next 6 months

We believe the risks of higher interest rates and slower economic growth are adequately priced in


Exhibit 12: SBI rebounded sharply as the cycle reversed

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10.0State Bank of India - Price to Adj. Book Value (x) 10 yr G-Sec

Source: Bloomberg

Though the contours of the prevailing economic sluggishness are materially different from 2008, a whiff of ‘normalisation’ of macroeconomic factors is bound to lead to a sharp upmove in financials stocks.

Worsening of the global economy – a risk

Stocks are currently trading well above their past trough valuations and further downside triggered by worsening of the global economy cannot be ruled out in the near term. Also, the next earnings season (Q2FY12) would likely be volatile, and higher delinquencies and earnings downgrades could trigger further correction in stock prices. However, we believe upside potential outweighs the downside risk and do not expect valuations to relapse to past troughs. In our view, any downside emerging due to such factors would be short-lived and should be used to build further positions in these stocks.

‘Disbelief’ + ‘Deep value’ to offer highest returns

A recovery in the economy is likely to trigger a U-turn in financials stocks – expected to be led by sector bell-weathers like SBI, HDFC Bank, HDFC and ICICI Bank. Also, PSU banks - trading at higher discounts to long-term average valuations (15-30%) - are likely to offer higher returns vis-à-vis private peers (10-20% discount to long-term averages). However, as the economy returns to stability, we expect higher beta stocks to outpace sector gains over next 12-18 months. As such, we expect stocks with the steepest discount to long-term valuations and pricing in the highest profitability erosion to outperform over the next 12-18 months.

Stocks which are pricing in the highest decline (in % terms) in RoAs are – BoB, PNB, Union Bank Canara Bank and OBC among PSU banks; and ICICI Bank, Axis Bank, Yes Bank and IndusInd among private ones. Of these, stocks trading at the highest discount to their long-term average offer the most favorable risk-reward. In this light, we identify Union Bank, Canara Bank, OBC, PNB, Axis Bank, Yes Bank and ING Vysya Bank as high beta stocks where the market has ‘disbelief’.

Valuations will not dip to previous troughs, though there is room for some

further downside

A stock rebound is likely to be led by bellwethers

like SBI, HDFC Bank, HDFC and ICICI Bank

Union Bank, Canara Bank, OBC, Axis Bank and Yes

Bank offer the most favorable risk-reward


Exhibit 13: Valuation summary

Valuations - P/BV (x) FY13 ROA disc to Dividend Current 12m fwd LT average Max Min Discount to Discount to estimates (%) yield (%) LT avg (%) max (%) bp % PSU Banks Bank of Baroda 1.2 1.1 2 0.5 5 (41) (62) (50) 2.5 Bank of India 0.9 1.3 2.2 0.6 (26) (58) (24) (29) 2.4 Punjab National Bank 1.1 1.3 1.9 0.6 (16) (41) (64) (49) 2.9 State Bank of India 1.1 1.4 2.5 0.7 (20) (54) (16) (16) 1.6 Union Bank of India 0.9 1.2 1.8 0.7 (23) (48) (58) (53) 3.6 OBC 0.7 0.9 1.4 0.3 (25) (53) (64) (58) 3.5 Allahabad Bank 0.7 0.9 1.5 0.3 (20) (51) (63) (57) 4.5 Canara Bank 0.8 1.1 1.9 0.5 (27) (56) (86) (66) 2.4 Corporation Bank 0.7 1 2 0.4 (36) (67) (49) (51) 4.9 Indian Bank 0.8 1 1.8 0.4 (14) (53) (109) (69) 4.1 PVT Banks Axis Bank 1.8 2.3 4.5 0.7 (23) (61) (35) (22) 1.5 HDFC Bank 3.4 3.4 5.2 1.7 - (35) (13) (8) 0.8 ICICI Bank 1.7 1.9 3.3 0.6 (12) (49) (44) (27) 1.8 Yes Bank 1.9 2.6 5.1 0.5 (27) (64) (23) (16) 0.9 IndusInd Bank 2.5 1.8 3.3 0.5 38 (25) (34) (22) 0.9 ING Vysya Bank 1.2 1.4 2.5 0.6 (14) (51) (37) (33) 1.1 Source: IDFC Securities Research, Bloomberg


COMPANIES


AAllllaahhaabbaadd BBaannkk OUTPERFORMER (Rs156, MCAP: Rs74bn / US$1.5bn)

Price performance Valuations at discount to long term averages

What does the current price imply? What are we building in?

Why the divergence? Stock prices building in a steep rise in gross NPAs

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-10

Oct

-10

Nov-

10N

ov-

10D

ec-1

0D

ec-1

0Ja

n-11

Jan-

11Fe

b-11

Feb-

11M

ar-1

1M

ar-1

1A

pr-1

1A

pr-1

1A

pr-1

1M

ay-1

1M

ay-1

1Ju

n-11

Jun-

11Ju

l-11

Jul-1

1A

ug-1

1A

ug-1

1Se

p-11

Sep-

11Se

p-11

Oct

-11

Allahabad Bank Bankex

0.0

0.4

0.8

1.2

1.6

Mar/03

Mar/04

Mar/05

Mar/06

Mar/07

Mar/08

Mar/09

Mar/10

Mar/11

0.00

2.50

5.00

7.50

10.00

Allahabad Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 2.4 2.4 2.9 3.0 2.9 Non-fund rev./avg assets 1.2 1.2 0.9 0.8 0.8 Operating exp./avg assets 1.5 1.5 1.7 1.6 1.6 Cost/Income 43.5 40.3 44.5 42.1 41.5 Prov./avg assets 0.9 0.7 0.8 0.7 0.6 PBT/Average assets 1.2 1.6 1.4 1.6 1.6 RoA 0.85 1.10 1.04 1.10 1.11 RoE 16.44 22.21 21.04 22.01 22.54 Gross NPA (%) 1.83 1.71 1.76 1.98 2.22 Gross NPA (Rs m) 10,783 12,218 16,479 23,071 31,146 Net NPA 0.71 0.66 0.79 0.67 0.53 Net NPA (Rs m) 4,191 4,702 7,364 7,744 7,483

FY12E FY13E

3 yr beta 0.96 0.96

Risk free rate 8.0 8.0

Risk premium 5.0 5.0

Cost of equity (Ke) 12.8 12.8

Terminal growth rate 4.0 4.0

Current trading multiple 0.83 0.68

Implied sustainable ROE 11.3 10.0

Implied sustainable ROA 0.54 0.48

Leverage assumption 20.8 20.8

0.00

1.50

3.00

4.50

6.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

0.9

1.2

G NPAs % (IDFC Sec est) - LH S G NPAs implied (%) - LH S

Prov/ assets % (IDFC Sec est) - RH S Prov/ assets (implied - %) - RHSYear to 31 March (%) FY11 FY12E FY13EImplied ROA 0.54 0.48 Implied pre-tax ROA 0.80 0.70 Implied Decline from our est 0.82 0.93 Of this: Assumed decline in NIMs 0.20 0.20 Of this: Assumed Rise in provisions 0.62 0.73 At coverage of : 70% 70%Addition to GNPA (% of assets) 1.47 1.64 Addition to GNPA (% of loans) 2.31 2.56 Total GNPA outstanding (%) 1.76 4.07 6.62 yoy rise (%) 131.2 62.8 Total GNPA outstanding (Rs m) 16,479 47,349 92,820 yoy rise (%) 187.3 96.0


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 21,586 26,504 40,225 49,403 58,551 yoy growth (%) 21.2 22.8 51.8 22.8 18.5 Other income 11,419 15,159 13,704 15,510 17,943 yoy growth (%) 33.4 32.7 (9.6) 13.2 15.7 Trading profits 6,863 7,633 1,615 1,500 1,600 Non trading income 5,692 9,394 12,102 15,110 17,443 Net revenue 33,006 41,663 53,929 64,912 76,494 yoy growth (%) 25.2 26.2 29.4 20.4 17.8 Operating expenses 13,994 16,178 23,383 26,785 31,174 yoy growth (%) 20.9 15.6 44.5 14.5 16.4 Operating profit 19,011 25,486 30,546 38,127 45,320 yoy growth (%) 28.5 34.1 19.9 24.8 18.9 Provisions 8,254 7,769 11,239 11,116 12,486 of which: NPA Provisions 3,132 8,302 8,000 6,825 8,336 PBT 10,758 17,716 19,307 27,011 32,834 yoy growth (%) (4.1) 64.7 9.0 39.9 21.6 Provision for tax 3,072 5,653 5,076 8,644 10,507 PAT 7,686 12,063 14,231 18,367 22,327 yoy growth (%) (21.2) 57.0 18.0 29.1 21.6

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 588,018 716,049 936,249 1,163,676 1,401,218

yoy growth (%) 18.3 21.8 30.8 24.3 20.4

Customer Assets 580,284 682,440 880,633 1,096,389 1,315,666

yoy growth (%) 22.4 17.6 29.0 24.5 20.0

SLR portfolio 216,764 311,212 352,224 383,700 458,416

Cash & bank balances 66,368 91,682 110,274 137,842 165,411

Total assets 976,480 1,216,992 1,512,864 1,830,069 2,186,961

Networth 49,786 58,843 76,431 90,501 107,603

Deposits 849,718 1,060,558 1,318,872 1,598,752 1,910,067

- Current % 7.8 7.8 6.9 7.5 7.5

- Savings % 26.8 26.7 26.5 26.0 26.0

- Term % 65.4 65.5 66.5 66.5 66.5

Borrowings 38,489 54,355 69,182 86,477 108,097

Key valuation metrics

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs mn) 7,686 12,063 14,231 18,367 22,327

yoy growth (%) (21.2) 57.0 18.0 29.1 21.6

Shares in issue (mn) 446.7 446.7 476.2 476.2 476.2

EPS (Rs) 17.2 27.0 30.0 38.6 46.9

EPS growth (%) (21.2) 57.0 11.2 28.4 21.6

PE (x) 9.0 5.8 5.2 3.7 3.0

Adj. Book value (Rs/share) 109.3 129.4 155.4 188.3 229.9

P/ Adj. Book (x) 1.4 1.2 1.0 0.8 0.6

RoAE (%) 16.4 22.2 21.0 22.0 22.5

Ratio analysis

Year to 31 Mar (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 2.4 2.4 2.9 3.0 2.9

Non-fund rev./avg assets 1.2 1.2 0.9 0.8 0.8

Operating exp./avg assets 1.5 1.5 1.7 1.6 1.6

Prov./avg customer assets 0.6 1.4 1.1 0.7 0.7

PBT/Average assets 1.2 1.6 1.4 1.6 1.6

RoA 0.9 1.1 1.0 1.1 1.1

RoAE 16.4 22.2 21.0 22.0 22.5

Cost/Income 42.4 38.8 43.4 41.3 40.8

Tax/PBT 28.6 31.9 26.3 32.0 32.0

Tier I Capital adequacy 8.0 8.1 8.6 7.9 7.5

Gross NPA 1.8 1.7 1.8 2.0 2.2

Net NPA 0.7 0.7 0.8 0.7 0.5

Provisioning coverage 61.1 61.5 55.3 66.4 76.0

Growth in customer assets 22.4 17.6 29.0 24.5 20.0

Growth in advances 18.3 21.8 30.8 24.3 20.4

Growth in deposits 18.6 24.8 24.4 21.2 19.5

SLR ratio 25.5 29.3 26.7 24.0 24.0

CASA ratio 34.6 34.5 33.5 33.5 33.5 Shareholding pattern (%)

Foreign14.6%

Promoters58.0%

Institutions15.8%

Non-promoter corporate holding1.2%

Public & others10.4%

As of June 2011


BBaannkk ooff BBaarrooddaa OUTPERFORMER (Rs771, MCAP: Rs302bn / US$6.1bn)




70

80

90

100

110

120

Oct

-10

Oct

-10

Oct

-10

Nov

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11Ja

n-11

Feb-

11Fe

b-11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11Ju

n-11

Jul-1

1Ju

l-11

Aug

-11

Aug

-11

Sep-

11Se

p-11

Sep-

11O

ct-1

1

Bank of Baroda Bankex

0.0

0.5

1.0

1.5

2.0

2.5

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

4.00

5.40

6.80

8.20

9.60

11.00Bank of Baroda - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 2.5 2.3 2.7 2.5 2.5 Non-fund rev./avg assets 1.4 1.1 0.9 0.8 0.7 Operating exp./avg assets 1.8 1.5 1.5 1.2 1.2 Prov./avg assets 0.5 0.3 0.4 0.3 0.3 PBT/Average assets 1.6 1.7 1.8 1.8 1.8 RoA 1.09 1.21 1.33 1.24 1.24 RoE 21.34 24.47 25.47 22.65 22.63 Gross NPA (%) 1.28 1.37 1.38 1.55 1.77 Gross NPA (Rs m) 18,429 24,007 31,525 42,559 57,454 Net NPA 0.31 0.34 0.35 0.39 0.45 Net NPA (Rs m) 4,512 6,023 7,909 10,835 14,533 Provisioning coverage 75.5 74.9 74.9 74.5 74.7

FY12E FY13E

3 yr beta 0.90 0.90









0.00

1.50

3.00

4.50

6.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

9

1.2

GNPAs % (IDFC Sec est) - LHS GNPAs implied (%) - LHS

Prov/ assets % (IDFC Sec est) - RHS Prov/ assets (implied - %) - RHS

Year to 31 March (%) FY11 FY12E FY13EImplied ROA 0.71 0.62 Implied pre-tax ROA 1.01 0.89 Implied Decline from our est 0.76 0.88 Of this: Assumed decline in NIMs 0.20 0.20 Of this: Assumed Rise in provisions 0.56 0.68 At coverage of : 70% 70%Addition to GNPA (% of assets) 1.12 1.31 Addition to GNPA (% of loans) 1.77 2.09 Total GNPA outstanding (%) 1.38 3.15 5.24 yoy rise (%) 128.6 66.2 Total GNPA outstanding (Rs m) 31,525 86,469 169,585 yoy rise (%) 174.3 96.1


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 51,234 59,395 85,503 99,040 119,474 yoy growth (%) 31.0 15.9 44.0 15.8 20.6 Other income 27,577 27,249 28,092 30,939 35,137 yoy growth (%) 34.5 (1.2) 3.1 10.1 13.6 Trading profits 9,001 7,233 4,435 3,300 3,300 Non trading income 18,576 20,016 23,657 27,639 31,837 Net revenue 78,811 86,644 113,594 129,979 154,612 yoy growth (%) 32.2 9.9 31.1 14.4 19.0 Operating expenses 35,761 38,106 46,298 47,483 55,551 yoy growth (%) 21.9 6.6 21.5 2.6 17.0 Operating profit 43,050 48,538 67,296 82,496 99,061 yoy growth (%) 42 13 39 23 20 Provisions 9,621 6,972 13,313 11,863 14,573 of which NPA provisions 2,686 9,513 10,401 9,033 11,197 PBT 33,429 42,381 56,503 70,113 83,968 yoy growth (%) 51.5 26.8 33.3 24.1 19.8 Provision for tax 11,157 11,797 14,086 21,034 25,190 PAT 22,272 30,583 42,417 49,079 58,778 yoy growth (%) 55.1 37.3 38.7 15.7 19.8

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Advances 1,439,859 1,750,353 2,286,764 2,744,116 3,238,057

yoy growth (%) 34.9% 21.6% 30.6% 20.0% 18.0%

Customer assets 1,501,450 1,773,871 2,343,269 2,774,746 3,277,876

yoy growth (%) 35% 18% 32% 18% 18%

SLR portfolio 411,013 494,425 598,252 776,098 919,091


Total assets 2,274,067 2,783,167 3,583,972 4,325,397 5,148,465

Networth 113,872 136,063 197,012 236,276 283,298

Deposits 1,923,970 2,410,443 3,054,395 3,695,704 4,376,625

- Current % 7.5% 7.9% 7.6% 7.5% 7.5%

- Savings % 22.1% 21.8% 21.1% 20.5% 20.5%

- Term % 70.4% 70.4% 71.3% 72.0% 72.0%

Borrowings 56,361 61,599 129,062 161,327 201,659


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs m) 22,272 30,583 42,417 49,079 58,778 yoy growth (%) 55.1 37.3 38.7 15.7 19.8 Shares in issue (m) 364.3 364.3 391.5 391.5 391.5 EPS (Rs) 61.1 84.0 108.3 125.3 150.1 EPS growth (%) 55.1 37.3 29.0 15.7 19.8 PE (x) 12.6 9.2 7.1 5.8 4.9 Adj. Book value (Rs/share) 315 377 507 608 730 P/ Adj. Book (x) 2.4 2.0 1.5 1.2 1.0 RoAE (%) 21.3 24.5 25.5 22.7 22.6

Ratio analysis




Prov./avg assets 0.5 0.3 0.4 0.3 0.3


RoA 1.1 1.2 1.33 1.24 1.24

RoE 21.3 24.5 25.5 22.7 22.6

Cost/Income 45.4 44.0 40.8 36.5 35.9

Tax/PBT 33.4 27.8 24.9 30.0 30.0


GrossNPA 1.3 1.4 1.4 1.6 1.8

Net NPA 0.3 0.3 0.3 0.4 0.4





SLR ratio 20.8 20.0 18.8 21.0 21.0


Foreign16.6%

Promoters57.0%

Institutions16.3%

Non-promoter corporate holding

Public & others5.2%

4.9% As of June 2011


BBaannkk ooff IInnddiiaa OUTPERFORMER (Rs338, MCAP: Rs185bn / US$3.8bn)




40

60

80

100

120

Oct

-10

Oct

-10

Oct

-10

Nov-

10N

ov-

10D

ec-1

0D

ec-1

0Ja

n-11

Jan-

11Fe

b-11

Feb-

11M

ar-1

1M

ar-1

1A

pr-1

1A

pr-1

1A

pr-1

1M

ay-1

1M

ay-1

1Ju

n-11

Jun-

11Ju

l-11

Jul-1

1A

ug-1

1A

ug-1

1Se

p-11

Sep-

11Se

p-11

Oct

-11

Bank of India Bankex

0.0

0.5

1.0

1.5

2.0

2.5

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.00

4.00

6.00

8.00

10.00Bank of India - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 1.12 1.12









0.00

1.50

3.00

4.50

6.00

2009 2010 2011 2012 2013

0.0

0.3

0.5

0.8

1.0


Prov/ assets % (IDFC Sec est) - RHS Prov/ assets (implied - %) - RHSYear to 31 March (%) FY11 FY12E FY13EImplied ROA 0.69 0.60 Implied pre-tax ROA 1.01 0.89 Implied Decline from our est 0.10 0.36 Of this: Assumed decline in NIMs 0.05 0.10 Of this: Assumed Rise in provisions 0.05 0.26 At coverage of : 70% 70%Addition to GNPA (% of assets) 0.71 0.94 Addition to GNPA (% of loans) 1.15 1.55 Total GNPA outstanding (%) 2.26 3.41 4.96 yoy rise (%) 51.1 45.5 Total GNPA outstanding (Rs m) 48,118 86,974 148,994 yoy rise (%) 80.8 71.3


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 54,989 57,559 78,107 83,244 102,902 yoy growth (%) 30.0 4.7 35.7 6.6 23.6 Other income 30,519 26,166 26,418 29,321 33,235 yoy growth (%) 44.2 (14.3) 1.0 11.0 13.3 Trading profits 7,461 5,936 3,218 3,000 3,000 Non trading income 23,058 20,230 23,199 26,321 30,235 Net revenue 85,508 83,726 104,525 112,565 136,137 yoy growth (%) 34.7 (2.1) 24.8 7.7 20.9 Operating expenses 30,940 36,678 50,681 49,064 56,276 yoy growth (%) 17.0 18.5 38.2 (3.2) 14.7 Operating profit 54,568 47,048 53,844 63,501 79,861 yoy growth (%) 47.4 (13.8) 14.4 17.9 25.8 Provisions 12,924 22,110 18,888 21,029 23,053 of which: NPA Provisions 6,230 17,543 10,543 17,258 18,241 PBT 41,644 24,938 34,956 42,472 56,808 yoy growth (%) 55.1 (40.1) 40.2 21.5 33.8 Provision for tax 11,571 7,528 10,067 13,591 18,179 PAT 30,074 17,410 24,889 28,881 38,629 yoy growth (%) 49.7 (42.1) 43.0 16.0 33.8

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 1,429,094 1,684,907 2,130,962 2,548,830 3,001,876

yoy growth (%) 25.9 17.9 26.5 19.6 17.8

Customer assets 1,468,344 1,721,987 2,253,419 2,685,983 3,159,601

yoy growth (%) 25.9 17.3 30.9 19.2 17.6

SLR portfolio 431,896 573,354 678,590 746,860 895,131


Total assets 2,255,018 2,749,665 3,511,725 4,158,351 4,962,009

Networth 111,436 124,560 155,104 179,653 212,488

Deposits 1,897,085 2,297,619 2,988,858 3,556,477 4,262,530

- Current % 6.6 6.9 5.6 7.0 7.0

- Savings % 20.1 20.9 19.8 21.5 21.5

- Term % 73.2 72.2 74.6 71.5 71.5

Borrowings 156,732 223,999 220,214 242,235 266,459


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs m) 30,074 17,410 24,889 28,881 38,629 yoy growth (%) 49.7 (42.1) 43.0 16.0 33.8 Shares in issue (m) 525.9 525.9 547.2 547.2 547.2 EPS (Rs) 57.2 33.1 45.5 52.8 70.6 EPS growth (%) 40.7 (42.1) 37.4 16.0 33.8 PE (x) 5.9 9.4 7.4 5.9 4.4 Book value (Rs/share) 212 237 283 328 388 Adj. Book value (Rs/share) 214 223 274 314 378 P/ Adj. Book (x) 1.6 1.5 1.2 1.0 0.8 RoAE (%) 30.4 14.8 17.8 17.3 19.7

Ratio analysis






RoA 1.5 0.7 0.8 0.8 0.8

RoE 30.4 14.8 17.8 17.3 19.7

Cost/Income 36.2 43.8 48.5 43.6 41.3

Tax/PBT 27.8 30.2 28.8 32.0 32.0


Gross NPA 1.7 2.9 2.3 3.0 3.3

Net NPA 0.4 1.3 0.9 1.2 1.2


CASA ratio 26.8 27.8 25.4 28.5 28.5




SLR- NDTL Ratio 21.0 22.7 21.1 21.0 21.0


Foreign15.5%

Promoters65.9%

Institutions12.4%


Public & others5.6%

As of June 2011


CCaannaarraa BBaannkk OUTPERFORMER (Rs459, MCAP: Rs203bn / US$4.1bn)




60

85

110

135

160

Oct

-10

Oct

-10

Oct

-10

Nov

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11Ja

n-11

Feb-

11Fe

b-11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11Ju

l-11

Jul-1

1

Aug

-11

Aug

-11

Sep-

11Se

p-11

Sep-

11

Oct

-11

Canara Bank Bankex

0.0

0.5

1.0

1.5

2.0

Dec

/02

Dec

/03

Dec

/04

Dec

/05

Dec

/06

Dec

/07

Dec

/08

Dec

/09

Dec

/10

0.0

2.5

5.0

7.5

10.0Canara Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.91 0.91









0.00

1.75

3.50

5.25

7.00

2009 2010 2011 2012 20130.0

0.4

0.7

1.1

1.4

G NPAs % (IDFC Sec est) - LHS G NPAs implied (%) - LHS




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 47,178 56,805 78,233 84,057 101,943 yoy growth (%) 33.4 20.4 37.7 7.4 21.3 Other income 23,112 28,579 27,030 30,562 36,694 yoy growth (%) 4.4 23.7 -5.4 13.1 20.1 Trading profits 6,746 8,724 2,363 1,000 1,500 Non trading income 16,366 19,855 24,667 29,562 35,194 Net revenue 70,290 85,384 105,263 114,619 138,637 yoy growth (%) 22.2 21.5 23.3 8.9 21.0 Operating expenses 30,653 34,776 44,193 45,542 53,036 yoy growth (%) 9.8 13.5 27.1 3.1 16.5 Operating profit 39,638 50,608 61,070 69,077 85,601 yoy growth (%) 33.9 27.7 20.7 13.1 23.9 Provisions 13,914 12,394 10,811 11,832 14,129 Of which: NPA Provisions 9,000 14,262 10,012 9,593 10,331 PBT 25,724 38,214 50,259 57,245 71,473 yoy growth (%) 35.0 48.6 31.5 13.9 24.9 Provision for tax 5,000 8,000 10,000 11,735 15,009 PAT 20,724 30,214 40,259 45,510 56,463 yoy growth (%) 32.4 45.8 33.2 13.0 24.1

Balance sheet


yoy growth (%) 28.9 22.5 25.5 19.3 19.7

Customer assets 1,236,512 1,498,037 1,911,077 2,279,001 2,727,350

yoy growth (%) 31.6 21.2 27.6 19.3 19.7

SLR portfolio 513,202 631,302 713,877 842,489 1,005,332


Total assets 2,196,458 2,647,411 3,360,788 3,982,220 4,727,119

Networth 100,396 125,391 179,415 219,168 269,875

Deposits 1,868,925 2,346,514 2,939,727 3,510,372 4,188,882

- Current % 7.7 7.8 8.3 6.0 6.0

- Savings % 22.4 21.3 19.9 20.5 20.5

- Term % 69.9 70.9 71.7 73.5 73.5

Borrowings 140,010 84,406 142,616 149,747 157,235



yoy growth (%) 32.4 45.8 33.2 13.0 24.1


EPS (Rs) 50.5 73.7 90.9 102.7 127.5

EPS growth (%) 32.4 45.8 23.3 13.0 24.1

PE (x) 9.1 6.2 5.0 4.1 3.3


P/ Adj. Book (x) 2.0 1.6 1.2 0.9 0.7

RONW (%) 22.6 26.8 26.4 22.8 23.1

Ratio analysis




Cost/Income 43.6 40.7 42.0 39.7 38.3



RoA 1.0 1.2 1.3 1.2 1.3

RoE 22.6 26.8 26.4 22.8 23.1

Tax/PBT 19.4 20.9 19.9 20.5 21.0


GrossNPA 1.6 1.5 1.5 1.7 2.0

Net NPA 1.1 1.1 1.1 1.2 1.2





SLR Ratio 27.5 26.9 24.3 24.0 24.0


Foreign15.6%

Promoters67.7%

Institutions10.3%


Public & others4.8%

As of June 2011


CCoorrppoorraattiioonn BBaannkk NEUTRAL (Rs417, MCAP: Rs62bn / US$1.3bn)




50

60

70

80

90

100

110

120

Oct

-10

Oct

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Apr

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Sep-

11

Sep-

11

Oct

-11

Corporation Bank Bankex

0.0

0.5

1.0

1.5

2.0

2.5

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.40

4.80

7.20

9.60

12.00Corporation Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.84 0.84









0.00

1.00

2.00

3.00

4.00

5.00

2009 2010 2011 2012 20130.0

0.2

0.4

0.6

0.8

1.0




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 16,910 21,599 29,398 31,756 39,246 yoy growth (%) 17.2 27.7 36.1 8.0 23.6 Other income 11,072 12,368 13,244 14,846 16,592 yoy growth (%) 58.2 11.7 7.1 12.1 11.8 Trading profits 4,425 3,592 1,322 1,500 1,200 Non trading income 6,647 8,776 11,921 13,346 15,392 Net revenue 27,982 33,967 42,641 46,601 55,838 yoy growth (%) 30.6 21.4 25.5 9.3 19.8 Operating expenses 10,016 12,600 16,417 19,038 23,243 yoy growth (%) 12.3 25.8 30.3 16.0 22.1 Operating profit 17,966 21,368 26,224 27,563 32,596 yoy growth (%) 43.6 18.9 22.7 5.1 18.3 Provisions 4,104 4,744 6,888 6,198 6,270 of which NPA provisions 1,700 3,453 5,478 4,726 4,775 PBT 13,862 16,623 19,336 21,365 26,325 yoy growth (%) 30.1 19.9 16.3 10.5 23.2 Provision for tax 4,935 4,921 5,204 6,410 7,898 PAT 8,928 11,703 14,133 14,956 18,428 yoy growth (%) 21.5 31.1 20.8 5.8 23.2

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 485,122 632,026 868,504 1,073,943 1,285,304

yoy growth (%) 23.8 30.3 37.4 23.7 19.7

Customer assets 589,703 761,650 1,038,343 1,287,940 1,544,241

yoy growth (%) 20.6 29.2 36.3 24.0 19.9

SLR portfolio 176,416 248,501 281,109 341,146 409,072


Total assets 869,057 1,116,672 1,435,085 1,735,193 2,074,626

Networth 48,965 57,750 71,378 82,834 96,950

Deposits 739,839 927,337 1,167,475 1,420,537 1,703,514

- Current % 17.8 14.5 12.1 12.0 12.0

- Savings % 13.6 14.0 13.9 14.0 14.0

- Term % 68.6 71.4 74.0 74.0 74.0

Borrowings 45,724 90,775 159,654 191,585 229,901


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs m) 8,928 11,703 14,133 14,956 18,428

yoy growth (%) 21.5 31.1 20.8 5.8 23.2

Shares in issue (m) 143.4 143.5 148.1 148.1 148.1

EPS (Rs) 62.2 81.6 96.9 101.0 124.4

EPS growth (%) 21.5 31.0 18.8 4.2 23.2

PE (x) 6.5 4.9 4.2 4.0 3.2


P/Adj. Book (x) 1.21 1.04 0.89 0.72 0.61

RONW (%) 19.6 21.9 21.9 19.4 20.5

Ratio analysis




Cost/Income 35.8 37.1 38.5 40.9 41.6

Prov./avg assets 0.5 0.5 0.5 0.4 0.3


RoA 1.2 1.2 1.1 0.9 1.0

RoE 19.6 21.9 21.9 19.4 20.5

Tax/PBT 35.6 29.6 26.9 30.0 30.0


GrossNPA 1.2 1.0 0.9 1.1 1.4

Net NPA 0.3 0.3 0.5 0.3 0.4




SLR ratio 23.7 26.7 24.1 24.0 24.0


Foreign5.0%

Public & others3.3%


Institutions30.8%

Promoters58.5%

As of June 2011


IInnddiiaann BBaannkk OUTPERFORMER (Rs204, MCAP: Rs88bn / US$1.8bn)




60

75

90

105

120

Oct

-10

Oct

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Apr

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Sep-

11

Sep-

11

Oct

-11

Indian Bank Bankex

0.0

0.5

1.0

1.5

2.0

Feb/

07

Feb/

08

Feb/

09

Feb/

10

Feb/

11

0.00

2.50

5.00

7.50

10.00Indian Bank - Price to Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 3.4 3.6 3.6 3.4 3.5 Non-fund rev./avg assets 1.3 1.3 1.1 0.9 0.9 Operating exp./avg assets 1.8 1.9 1.7 1.6 1.6 Prov./avg assets 0.6 0.4 0.6 0.4 0.4 PBT/Average assets 2.3 2.5 2.4 2.3 2.4 RoA 1.61 1.68 1.54 1.52 1.59 RoE 22.90 24.05 22.30 22.41 23.36 Gross NPA (%) 0.89 0.82 0.98 1.14 1.33 Gross NPA (Rs m) 4,592 5,101 7,403 10,364 14,510 Net NPA 0.18 0.23 0.53 0.29 0.10 Net NPA (Rs m) 938 1,449 3,970 2,620 1,097 Provisioning coverage 79.6 71.6 46.4 74.7 92.4

FY12E FY13E

3 yr beta 1.02 1.02









0.00

1.80

3.60

5.40

7.20

9.00

2009 2010 2011 2012 20130.0

0.4

0.8

1.2

1.6

2.0





Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 26,085 33,039 40,361 45,857 56,692 yoy growth (%) 31.0 26.7 22.2 13.6 23.6 Other income 10,354 11,733 11,819 11,897 14,675 yoy growth (%) (3.0) 13.3 0.7 0.7 23.3 Trading profits 1,948 2,176 1,495 1,500 1,500 Non trading income 8407 9556 10324 10397 13175 Net revenue 36,440 44,771 52,180 57,754 71,367 yoy growth (%) 19.1 22.9 16.5 10.7 23.6 Operating expenses 14,151 17,302 19,263 21,523 25,757 yoy growth (%) 1.1 22.3 11.3 11.7 19.7 Operating profit 22,288 27,469 32,917 36,231 45,610 yoy growth (%) 34.3 23.2 19.8 10.1 25.9 Provisions 4,427 3,957 6,572 5,639 7,097 of which: NPA Provisions 137 4,007 7,137 4,307 5,668 PBT 17,861 23,511 26,345 30,592 38,513 yoy growth (%) 44.6 31.6 12.1 16.1 25.9 Provision for tax 5,408 7,966 9,204 10,095 12,709 PAT 12,453 15,545 17,141 20,496 25,804 yoy growth (%) 23.5 24.8 10.3 19.6 25.9

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 513,965 621,461 752,499 910,524 1,092,629

yoy growth (%) 29.0 20.9 21.1 21.0 20.0

Customer Assets 537,870 654,899 820,036 992,244 1,190,693

yoy growth (%) 26.3 21.8 25.2 21.0 20.0

SLR portfolio 191,734 232,955 264,257 310,842 373,947


Total assets 840,538 1,013,893 1,217,183 1,474,927 1,764,105

Networth 58,803 70,470 83,265 99,631 121,305

Deposits 725,818 882,277 1,058,042 1,295,174 1,558,114

- Current % 7.3 7.5 6.1 6.5 6.5

- Savings % 24.3 24.7 24.8 24.5 24.5

- Term % 68.4 67.8 69.1 69.0 69.0

Borrowings 8,308 9,574 21,004 23,104 25,414


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E Net profit (Rs mn) 12,453 15,545 17,141 20,496

yoy growth (%) 23.5 24.8 10.3 19.6

Shares in issue (mn) 429.8 429.8 429.8 429.8

EPS (Rs) 29.0 36.2 39.9 47.7

EPS growth 23.5 24.8 10.3 19.6

PE (x) 7.0 5.6 5.1 4.1

Adj. Book value (Rs/share) 134.1 160.7 186.6 230.2

P/Adj. Book (x) 1.5 1.3 1.1 0.9

RoAE (%) 22.9 24.1 22.3 22.4

Ratio analysis




Prov./avg assets 0.6 0.4 0.6 0.4 0.4


RoA 1.6 1.7 1.5 1.5 1.6

RoE 22.9 24.1 22.3 22.4 23.4

Cost/Income 38.8 38.6 36.9 37.3 36.1

Tax/PBT 30.3 33.9 34.9 33.0 33.0


GrossNPA 0.9 0.8 1.0 1.1 1.3

Net NPA 0.2 0.2 0.5 0.3 0.1





SLR Ratio 26.4 26.4 25.0 24.0 24.0

CASA Ratio 31.6 32.2 30.9 31.0 31.0 Shareholding pattern (%)

Foreign9.9%

Public & others2.7%


Institutions4.2%

Promoters80.0%

As of June 2011


OOrriieennttaall BBaannkk ooff CCoommmmeerrccee OUTPERFORMER (Rs301, MCAP: Rs88bn / US$1.8bn)




55

70

85

100

115

Oct

-10

Oct

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Apr

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Sep-

11

Sep-

11

Oct

-11

OBC Bankex

0.0

0.5

1.0

1.5

2.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.50

5.00

7.50

10.00Oriental Bank of Commerce - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.94 0.94









0.00

1.75

3.50

5.25

7.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

0.9

1.2




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 19,965 29,074 41,776 44,640 53,087 yoy growth (%) 18.7 45.6 43.7 6.9 18.9 Other income 10,715 12,000 9,601 12,068 13,384 yoy growth (%) 73.8 12.0 (20.0) 25.7 10.9 Trading profits 4,814 4,239 754 1,300 1,000 Non trading income 5,901 7,762 8,847 10,768 12,384 Net revenue 30,680 41,075 51,376 56,708 66,471 yoy growth (%) 33.5 33.9 25.1 10.4 17.2 Operating expenses 13,828 16,860 18,925 22,400 24,912 yoy growth (%) 28.1 21.9 12.2 18.4 11.2 Operating profit 16,852 24,215 32,451 34,308 41,559 yoy growth (%) 38.2 43.7 34.0 5.7 21.1 Provisions 5,249 8,160 12,065 8,993 9,147 of which: NPA Provisions 1,706 5,316 9,343 7,041 7,084 PBT 11,602 16,055 20,386 25,315 32,412 yoy growth (%) -8.0 38.4 27.0 24.2 28.0 Provision for tax 2,546 4,706 5,357 7,848 10,048 PAT 9,056 11,349 15,029 17,467 22,364 yoy growth (%) 7.7 25.3 32.4 16.2 28.0

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13ECustomer assets 685,004 834,893 959,082 1,122,126 1,312,888

yoy growth (%) 25.5 21.9 14.9 17.0 17.0

Advances 685,004 834,893 959,082 1,122,126 1,312,888

yoy growth (%) 25.5 21.9 14.9 17.0 17.0

SLR portfolio 250,808 328,823 367,010 382,989 449,828


Total assets 1,125,826 1,374,310 1,613,434 1,859,467 2,191,310

Networth 64,523 73,592 102,987 116,661 135,232

Deposits 983,688 1,202,576 1,390,543 1,595,787 1,874,285

- Current % 7.8 8.5 6.8 7.0 8.0

- Savings % 15.9 16.5 17.8 18.0 18.0

- Term % 76.3 75.0 75.4 75.0 74.0

Borrowings 27,220 48,870 56,392 66,848 79,967



yoy growth (%) 7.7 25.3 32.4 16.2 28.0


EPS (Rs) 36.1 45.3 51.5 59.9 76.7

EPS growth (%) 7.7 25.3 13.7 16.2 28.0

PE (x) 8.3 6.6 5.8 4.7 3.7

Adjusted BV (Rs/share) 252.5 282.4 340.6 387.8 455.0

P/ Adjusted Book (x) 1.2 1.1 0.9 0.7 0.6

RoAE (%) 14.8 16.4 17.0 15.9 17.8

Ratio analysis




Cost/Income 45.1 41.0 36.8 39.5 37.5



RoA 0.9 0.9 1.0 1.0 1.1

RoE 14.8 16.4 17.0 15.9 17.8

Tax/PBT 21.9 29.3 26.3 31.0 31.0


Gross NPA 1.5 1.7 1.9 2.5 2.7

Net NPA 0.6 0.8 0.9 1.0 1.0


CASA ratio 23.7 25.0 24.6 25.0 26.0




SLR ratio 25.5 27.3 26.4 24.0 24.0 Shareholding pattern (%)

Foreign11.5%

Public & others4.7%


Institutions24.0%

Promoters58.0%

As of June 2011


PPuunnjjaabb NNaattiioonnaall BBaannkk OUTPERFORMER (Rs973, MCAP: Rs308bn / US$6.3bn)




60

70

80

90

100

110

Oct

-10

Oct

-10

Oct

-10

Nov-

10N

ov-

10D

ec-1

0D

ec-1

0Ja

n-11

Jan-

11Fe

b-11

Feb-

11M

ar-1

1M

ar-1

1A

pr-1

1

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11Ju

n-11

Jul-1

1Ju

l-11

Aug

-11

Aug

-11

Sep-

11

Sep-

11Se

p-11

Oct

-11

Punjab National Bank Bankex

0.0

0.5

1.0

1.5

2.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.50

5.00

7.50

10.00Punjab National Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.93 0.93









0.00

2.00

4.00

6.00

8.00

2009 2010 2011 2012 2013

0.0

0.4

0.8

1.2

1.6




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 70,309 85,229 118,073 134,043 162,145 yoy growth (%) 27.0 21.2 38.5 13.5 21.0 Other income 29,197 34,125 36,126 43,202 50,723 yoy growth (%) 46.2 16.9 5.9 19.6 17.4 Trading profits 6,647 8,030 2,992 2,000 2,500 Non trading income 22,550 26,095 33,134 41,202 48,223 Net revenue 99,505 119,354 154,199 177,245 212,867 yoy growth (%) 32.1 19.9 29.2 14.9 20.1 Operating expenses 42,062 47,619 63,642 72,993 87,336 yoy growth (%) 19.3 13.2 33.6 14.7 19.7 Operating profit 57,443 71,735 90,557 104,252 125,531 yoy growth (%) 43.4 24.9 26.2 15.1 20.4 Provisions 9,774 14,215 24,920 25,608 29,628 of which: NPA Provisions 8,210 9,905 20,037 18,787 22,522 PBT 47,669 59,048 65,637 78,644 95,903 yoy growth (%) 44.8 23.9 11.2 19.8 21.9 Provision for tax 16,760 19,994 21,302 25,952 31,648 PAT 30,909 39,054 44,335 52,691 64,255 yoy growth (%) 50.9 26.4 13.5 18.8 21.9

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13ECustomer assets 1,547,030 1,866,010 2,421,067 2,905,280 3,486,336

yoy growth (%) 29.5 20.6 29.7 20.0 20.0

Advances 1,547,030 1,866,010 2,421,067 2,905,280 3,486,336

yoy growth (%) 29.5 20.6 29.7 20.0 20.0

SLR portfolio 551,983 649,255 798,756 899,821 1,086,501


Total assets 2,469,186 2,966,330 3,783,252 4,465,191 5,345,110

Networth 131,399 162,092 200,378 246,100 297,504

Deposits 2,097,605 2,493,300 3,128,987 3,749,255 4,527,089

- Current % 9.0 9.5 8.6 9.0 9.0

- Savings % 29.9 31.3 29.9 29.5 28.0

- Term % 61.2 59.2 61.5 61.5 63.0

Borrowings 124,597 192,624 315,897 309,625 331,632


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs mn) 30,909 39,054 44,335 52,691 64,255 yoy growth (%) 50.9 26.4 13.5 18.8 21.9 Shares in issue (mn) 315.3 315.3 316.8 316.8 316.8 EPS (Rs) 98.0 123.9 139.9 166.3 202.8 EPS growth (%) 50.9 26.4 13.0 18.8 21.9 PE (x) 9.9 7.9 6.9 5.5 4.5 Adjusted BV (Rs/share) 434.7 513.5 609.6 774.5 953.7 P/ Adjusted Book (x) 2.24 1.89 1.60 1.17 0.95 RoAE (%) 25.8 26.6 24.5 23.6 23.6

Ratio analysis




Cost/Income 42.3 39.9 41.3 41.2 41.0

Prov./avg assets 0.4 0.5 0.7 0.6 0.6


RoA 1.4 1.4 1.3 1.3 1.3

RoE 25.8 26.6 24.5 23.6 23.6

Tax/PBT 35.2 33.9 32.5 33.0 33.0


Gross NPA 1.7 1.6 1.7 2.0 2.3

Net NPA 0.2 0.5 0.8 0.6 0.6


CASA ratio 38.8 40.8 38.5 38.5 37.0




SLR ratio 26.3 26.0 25.5 24.0 24.0 Shareholding pattern (%)

Foreign19.3%

Public & others4.0%


Institutions17.4%

Promoters58.0%

As of June 2011


SSttaattee BBaannkk ooff IInnddiiaa OUTPERFORMER (Rs1885, MCAP: Rs1197bn/US$24.4bn)




40

60

80

100

120

Oct

-10

Oct

-10

Oct

-10

Nov-

10

Nov-

10

Dec

-10

Dec

-10

Jan-

11

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep-

11

Sep-

11

Sep-

11

Oct

-11

State Bank of India Bankex

0.0

0.6

1.2

1.8

2.4

3.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.00

4.00

6.00

8.00

10.00State Bank of India - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.80 0.80









0.00

1.75

3.50

5.25

7.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

0.9

1.2


Prov/ assets % (IDFC Sec est) - RHS Prov/ assets (implied - %) - RHSYear to 31 March (%) FY11 FY12E FY13EImplied ROA 0.96 0.85 Implied pre-tax ROA 1.49 1.31 Implied Decline from our est 0.25 Of this: Assumed decline in NIMs -0.10 Of this: Assumed Rise in provisions 0.35 At coverage of : 80% 80%Addition to GNPA (% of assets) 0.63 1.04 Addition to GNPA (% of loans) 1.03 1.73 Total GNPA outstanding (%) 3.28 4.31 6.04 yoy rise (%) 31.4 40.1 Total GNPA outstanding (Rs m) 248,204 379,640 619,326 yoy rise (%) 53.0 63.1


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 208,731 236,714 325,264 391,419 437,417 yoy growth (%) 22.6 13.4 37.4 20.3 11.8 Other income 126,908 149,682 158,246 169,891 195,813 yoy growth (%) 46.0 17.9 5.7 7.4 15.3 Trading profits 25,673 21,168 9,210 7,000 8,500 Non trading income 101,235 128,514 149,036 162,891 187,313 Net revenue 335,639 386,396 483,510 561,310 633,230 yoy growth (%) 30.5 15.1 25.1 16.1 12.8 Operating expenses 156,487 203,187 230,154 263,088 300,532 yoy growth (%) 24.1 29.8 13.3 14.3 14.2 Operating profit 179,152 183,209 253,356 298,222 332,698 yoy growth (%) 36.7 2.3 38.3 17.7 11.6 Provisions 37,346 43,948 103,813 109,826 86,113 of which NPA provisions 24,750 51,479 87,921 88,851 75,319 PBT 141,806 139,261 149,542 188,396 246,585 yoy growth (%) 35.8 (1.8) 7.4 26.0 30.9 Provision for tax 50,594 47,600 66,897 67,822 86,305 PAT 91,212 91,660 82,645 120,573 160,280 yoy growth (%) 35.5 0.5 (9.8) 45.9 32.9

Balance sheet


yoy growth (%) 30.2% 16.5% 19.8% 16.4% 16.4%

Customer assets 5,756,565 6,706,905 7,974,212 9,283,001 10,807,121

yoy growth (%) 28.1% 16.5% 18.9% 16.4% 16.4%

SLR portfolio 2,281,102 2,277,411 2,311,652 2,724,511 3,219,162

Cash & bank balances 1,044,038 893,428 1,228,741 1,535,927 1,919,909

Total assets 9,644,319 10,462,775 12,237,362 14,502,684 17,083,967

Networth 579,477 659,492 649,860 746,319 874,543

Deposits 7,420,731 8,041,162 9,339,328 11,085,864 13,342,558

- Current % 14.9 15.2 14.0 11.5 11.5

- Savings % 26.7 32.0 35.4 35.0 35.0

- Term % 58.4 52.7 50.6 53.5 53.5

Borrowings 537,137 710,312 821,101 1,214,888 1,338,472



yoy growth (%) 35.5 0.5 (9.8) 45.9 32.9

Shares in issue (m) 634.9 634.9 635.0 635.0 635.0

EPS (Rs) 144.1 144.4 130.2 189.9 252.4

EPS growth (%) 12.7 0.2 (9.9) 45.9 32.9

PE (x) 13.1 13.1 14.5 9.0 6.8

Consolidated Book value (Rs/share) 1063 1231 1240 1464

1737

P/ Consolidated Book (x) 1.7 1.4 1.4 1.1 1.0

RONW (%) 17.1 14.8 12.6 17.3 19.8

Ratio analysis




Cost/Income 46.6 52.6 47.6 46.9 47.5

Prov./avg assets 0.4 0.4 0.9 0.8 0.5


RoA 1.1 0.9 0.7 0.9 1.0

RoE 17.1 14.8 12.6 17.3 19.8

Tax/PBT 35.7 34.2 44.7 36.0 35.0


GrossNPA 2.9 3.1 3.3 4.0 4.3

Net NPA 1.8 1.7 1.6 1.5 1.5




SLR ratio 30.5 28.2 24.7 24.5 24.0


Foreign13.9%

Public & others6.2%


Institutions17.4%

Promoters59.4%

As of June 2011


UUnniioonn BBaannkk ooff IInnddiiaa OUTPERFORMER (Rs253, MCAP: Rs133bn / US$2.7bn)




50

65

80

95

110

Oct

-10

Oct

-10

Oct

-10

Nov-

10

Nov-

10

Dec

-10

Dec

-10

Jan-

11

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep-

11

Sep-

11

Sep-

11

Oct

-11

Union Bank of India Bankex

0.0

0.5

1.0

1.5

2.0

Sep/

02

Sep/

03

Sep/

04

Sep/

05

Sep/

06

Sep/

07

Sep/

08

Sep/

09

Sep/

10

Sep/

11

0.00

3.00

6.00

9.00

12.00Union Bank of India - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.88 0.88









0.00

1.75

3.50

5.25

7.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

0.9

1.2




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 38,136 41,924 62,162 71,642 85,973 yoy growth (%) 33.7 9.9 48.3 15.3 20.0 Other income 14,826 19,747 20,388 22,277 24,712 yoy growth (%) 12.3 33.2 3.2 9.3 10.9 Trading profits 3,215 5,730 4,644 4,500 4,500 Non trading income 11,611 14,017 15,744 17,777 20,212 Net revenue 52,961 61,672 82,550 93,919 110,685 yoy growth (%) 26.9 16.4 33.9 13.8 17.9 Operating expenses 22,141 25,078 39,500 42,724 51,277 yoy growth (%) 39.0 13.3 57.5 8.2 20.0 Operating profit 30,820 36,593 43,050 51,195 59,408 yoy growth (%) 19.4 18.7 17.6 18.9 16.0 Provisions 7,370 8,264 13,516 12,822 10,898 of which: NPA Provisions 5,465 6,990 11,877 9,368 7,288 PBT 23,450 28,329 29,534 38,373 48,510 yoy growth (%) 26.0 20.8 4.3 29.9 26.4 Provision for tax 6,180 7,580 8,714 11,512 14,553 PAT 17,270 20,749 20,820 26,861 33,957 yoy growth (%) 24.5 20.1 0.3 29.0 26.4

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 965,342 1,193,153 1,509,861 1,798,358 2,125,960

yoy growth (%) 29.8 23.6 26.5 19.1 18.2

Customer Assets 1,039,772 1,301,350 1,619,444 1,913,420 2,252,528

yoy growth (%) 30.8 25.2 24.4 18.2 17.7

SLR portfolio 351,451 428,292 465,005 627,689 740,206


Total assets 1,609,756 1,951,618 2,359,844 2,869,175 3,380,458

Networth 70,544 88,078 110,797 131,681 158,465

Deposits 1,387,028 1,700,400 2,024,613 2,467,669 2,917,251

- Current % 9.5 9.5 9.7 10.0 10.0

- Savings % 20.6 22.2 22.1 22.0 22.0

- Term % 69.9 68.3 68.2 68.0 68.0

Borrowings 38,849 31,253 71,260 96,201 115,441



yoy growth (%) 24.5 20.1 0.3 29.0 26.4


EPS (Rs) 34.2 41.1 40.4 51.2 64.8

EPS growth (%) 24.5 20.1 (1.5) 26.7 26.4

PE (x) 7.4 6.2 6.3 4.4 3.5

Adjusted Book value (Rs/share)144.6 171.1 201.3 239.3 289.8

P/ Adj. book (x) 1.8 1.5 1.3 0.9 0.8

RONW (%) 27.2 26.2 20.9 22.2 23.4

Ratio analysis




Prov./avg assets 0.5 0.5 0.6 0.5 0.3


RoA 1.2 1.2 1.0 1.0 1.1

RoE 27.2 26.2 20.9 22.2 23.4

Cost/Income 41.8 40.7 47.8 45.5 46.3

Tax/PBT 26.4 26.8 29.5 30.0 30.0


GrossNPA 2.0 2.2 2.4 2.4 2.6

Net NPA 0.3 0.8 1.2 1.1 1.1





SLR ratio 24.1 24.1 21.7 24.0 24.0


Foreign14.3%

Public & others9.0%


Institutions12.8%

Promoters57.1%

As of June 2011


AAxxiiss BBaannkk OUTPERFORMER (Rs1103, MCAP: Rs453bn / US$9.2bn)




55

70

85

100

115

Oct

-10

Oct

-10

Oct

-10

Nov-

10N

ov-

10D

ec-1

0D

ec-1

0Ja

n-11

Jan-

11Fe

b-11

Feb-

11M

ar-1

1M

ar-1

1A

pr-1

1A

pr-1

1A

pr-1

1M

ay-1

1M

ay-1

1Ju

n-11

Jun-

11Ju

l-11

Jul-1

1A

ug-1

1A

ug-1

1Se

p-11

Sep-

11Se

p-11

Oct

-11

Axis Bank Bankex

0.0

1.0

2.0

3.0

4.0

5.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.00

4.00

6.00

8.00

10.00Axis Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 1.22 1.22









0.00

1.00

2.00

3.00

4.00

5.00

2009 2010 2011 2012 20130.0

0.2

0.4

0.6

8

1.0




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 36,862 50,045 65,630 76,616 94,576 yoy growth (%) 42.6 35.8 31.1 16.7 23.4 Other income 28,969 39,458 46,321 57,061 70,825 yoy growth (%) 61.3 36.2 17.4 23.2 24.1 Trading profits 2,802 7,102 3,593 3,500 4,000 Non trading income 26,166 32,356 42,728 53,561 66,825 Net revenue 65,831 89,503 111,951 133,677 165,401 yoy growth (%) 50.3 36.0 25.1 19.4 23.7 Operating expenses 28,582 37,097 47,794 58,769 71,590 yoy growth (%) 32.6 29.8 28.8 23.0 21.8 Operating profit 37,249 52,406 64,157 74,907 93,811 yoy growth (%) 67.3 40.7 22.4 16.8 25.2 Provisions 9,394 13,888 12,793 10,568 13,041 of which NPA Provisions 7,322 13,570 9,551 6,642 9,326 PBT 27,855 38,517 51,364 64,340 80,770 yoy growth (%) 69.2 38.3 33.4 25.3 25.5 Provision for tax 9,701 13,372 17,476 21,876 27,462 PAT 18,154 25,145 33,888 42,464 53,308 yoy growth (%) 69.5 38.5 34.8 25.3 25.5

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 815,770 1,043,431 1,424,078 1,753,615 2,132,444

yoy growth (%) 36.7 27.9 36.5 23.1 21.6

Customer assets 994,375 1,258,197 1,694,118 2,051,277 2,471,790

yoy growth (%) 36.9 26.5 34.6 21.1 20.5

SLR portfolio 277,272 341,959 441,550 556,342 735,047


Total assets 1,477,423 1,806,479 2,427,134 2,971,234 3,659,264

Networth 102,136 160,444 189,988 223,960 266,606

Deposits 1,173,741 1,413,002 1,892,378 2,318,094 2,856,494

- Current % 21.1 22.8 19.5 19.0 19.5

- Savings % 22.0 24.0 21.6 22.0 22.0

- Term % 56.9 53.3 58.9 59.0 58.5

Borrowings 137,232 171,696 262,679 328,690 412,404



yoy growth (%) 69.5 38.5 34.8 25.3 25.5


EPS (Rs) 50.7 65.8 83.1 103.4 129.8

EPS growth (%) 51.2 29.9 26.3 24.5 25.5

PE (x) 21.8 16.8 13.3 9.2 7.3


P/ Adj. Book (x) 3.9 2.8 2.4 1.7 1.5

ROAE (%) 19.1 19.2 19.3 20.5 21.7

Ratio analysis




Cost/Income 43.4 41.4 42.7 44.0 43.3



RoA 1.4 1.5 1.6 1.6 1.6

RoE 19.1 19.2 19.3 20.5 21.7

Tax/PBT 34.8 34.7 34.0 34.0 34.0

Gross NPA 1.0 1.3 1.1 1.4 1.8

Net NPA 0.4 0.4 0.3 0.4 0.5




SLR ratio 23.6 24.2 23.3 24.0 24.0

CASA ratio 43.1 46.7 41.1 41.0 41.5

Shareholding pattern (%)

Foreign

47.1%Promoters

37.2%

Public &

others

5.0%

Non-

promoter

corporate

holding

5.6%

Institutions

5.1% As of June 2011


HHDDFFCC BBaannkk OUTPERFORMER (Rs474, MCAP: Rs1102bn / US$22.5bn)




68

78

88

98

108

Oct

-10

Oct

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Apr

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Sep-

11

Sep-

11

Oct

-11

HDFC Bank Bankex

0.0

1.5

3.0

4.5

6.0

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

3.00

6.00

9.00

12.00HDFC Bank - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 0.95 0.95









0.00

1.00

2.00

3.00

2009 2010 2011 2012 20130.0

0.4

0.8

1.2

GNPAs % (IDFC Sec est) - LHS GNPAs implied (%) - LH S

Prov/ assets % (IDFC Sec est) - RHS Prov/ assets (implied - %) - RHSYear to 31 March (%) FY11 FY12E FY13EImplied ROA 1.75 1.54 Implied pre-tax ROA 2.62 2.31 Implied Decline from our est -0.19 0.19 Of this: Assumed decline in NIMs 0.10 Of this: Assumed Rise in provisions 0.09 At coverage of : 90% 90%Addition to GNPA (% of assets) 0.35 0.45 Addition to GNPA (% of loans) 0.59 0.76 Total GNPA outstanding (%) 1.06 1.65 2.41 yoy rise (%) 56.1 45.9 Total GNPA outstanding (Rs m) 16,943 33,692 61,838 yoy rise (%) 98.8 83.5


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 74,212 83,866 105,431 127,131 162,478 yoy growth (%) 42 13 26 21 28 Other income 33,186 38,076 43,352 52,824 62,602 yoy growth (%) 50.5 14.7 13.9 21.9 18.5 Trading profits 4,147 3,521 -534 600 1,500 Non trading income 29,039 34,555 43,886 52,224 61,102 Net revenue 107,397 121,942 148,783 179,955 225,080 yoy growth (%) 44.5 13.5 22.0 21.0 25.1 Operating expenses 55,328 57,645 71,529 85,448 102,021 yoy growth (%) 47.7 4.2 24.1 19.5 19.4 Provisions 19,071 21,400 19,067 18,519 24,544 PBT 32,999 42,897 58,187 75,988 98,516 yoy growth (%) 44.7 30.0 35.6 30.6 29.6 Provision for tax 10,549 13,410 18,923 25,076 33,003 PAT 22,449 29,487 39,264 50,912 65,513 yoy growth (%) 41.2 31.3 33.2 29.7 28.7

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13ECustomer assets 1,053,477 1,330,820 1,764,217 2,250,466 2,835,582

yoy growth (%) 9.2 26.3 32.6 27.6 60.7

SLR portfolio 521,578 510,504 536,518 695,854 873,269


Total assets 1,832,708 2,224,586 2,773,526 3,498,325 4,366,070

Networth 150,527 215,225 253,793 294,508 346,919

Deposits 1,428,116 1,674,044 2,085,864 2,705,071 3,366,572

yoy growth (%) 18.6 17.2 24.6 29.7 61.4

- Current % 19.9 22.2 22.3 18.0 18.0

- Savings % 24.4 29.8 30.4 31.0 31.0

- Term % 55.6 48.0 47.3 51.0 51.0

Borrowings 91,636 129,157 143,941 194,320 272,048



yoy growth (%) 41.2 31.3 33.2 29.7 28.7

Shares in issue (mn) 2,126.9 2,288.7 2,326.1 2,333.9 2,333.9

EPS (Rs) 12 13 17 22 28

EPS growth (%) (74.3) 16.0 27.4 28.4 28.5

PE (x) 41.2 35.5 27.8 22.2 17.3

Adjusted Book Value (Rs / share)70.6 94.7 110.0 126.7 149.3

P/ Adj Book (x) 6.7 5.0 4.3 3.8 3.2

RONW (%) 16.1 16.1 16.7 18.6 20.4

Ratio analysis




Cost/Income 51.5 47.3 48.1 47.5 45.3



RoA 1.3 1.5 1.6 1.6 1.7

RoE 16.1 16.1 16.7 18.6 20.4

Tax/PBT 32.0 31.3 32.5 33.0 33.5


GrossNPA 2.0 1.4 1.1 1.2 1.4

Net NPA 0.6 0.3 0.2 0.3 0.4




SLR ratio 34.3 28.3 24.1 24.0 24.0


Foreign47.7%

Public & others9.1%

Non-promoter corporate holding8.8% Institutions

11.1%

Promoters23.3%

As of June 2011


IICCIICCII BBaannkk OUTPERFORMER (Rs890, MCAP: Rs1026bn / US$20.9bn)




65

75

85

95

105

115

Oct

-10

Oct

-10

Oct

-10

Nov

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep-

11

Sep-

11

Sep-

11

Oct

-11

ICICI Bank Bankex

0.0

0.9

1.7

2.6

3.4

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

3.00

6.00

9.00

12.00ICICI Bank - Price to Book Value (x) Average(06-11) 10 yr G-Sec


FY12E FY13E

3 yr beta 1.45 1.45









0.00

3.00

6.00

9.00

2009 2010 2011 2012 2013

0.0

0.3

0.6

0.9





Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 83,666 81,144 90,169 104,486 131,907 yoy growth (%) 14.5 (3.0) 11.1 15.9 26.2

Other income 76,037 74,777 66,479 75,749 87,405

yoy growth (%) (13.7) (1.7) (11.1) 13.9 15.4

Trading profits 4,430 11,810 (2,150) 1,500 2,500

Non trading income 71,607 62,967 68,629 74,249 84,905

Net revenue 159,703 155,920 156,648 180,235 219,312 yoy growth (%) (0.9) (2.4) 0.5 15.1 21.7

Operating expenses 70,451 58,598 66,173 75,412 87,581

yoy growth (%) (13.6) (16.8) 12.9 14.0 16.1

Operating profit 89,252 97,322 90,475 104,823 131,730

yoy growth (%) 12.1 9.0 (7.0) 15.9 25.7

Provisions 38,083 43,869 22,868 16,211 18,625

of which NPA provisions 37,690 43,622 19,769 15,067 16,707

PBT 51,170 53,453 67,607 88,612 113,105 yoy growth (%) 1.2 4.5 26.5 31.1 27.6

Provision for tax 13,588 13,203 16,093 24,368 31,104

PAT 37,581 40,250 51,513 64,244 82,001 yoy growth (%) (9.6) 7.1 28.0 24.7 27.6

Balance sheet


yoy growth (%) (3.2) (17.0) 19.4 17.6 18.8

Customer assets 2,405,798 2,155,788 2,682,056 3,125,100 3,677,690

yoy growth (%) (2.9) (10.4) 24.4 16.5 17.7

SLR portfolio 633,868 684,036 641,613 769,247 912,964


Total assets 3,793,010 3,633,997 4,062,337 4,650,225 5,484,456

Networth 495,330 516,184 550,906 592,665 645,966

Deposits 2,183,478 2,020,166 2,256,021 2,639,118 3,152,799

yoy growth (%) -10.7 -7.5 11.7 17.0 19.5

- Current % 9.9% 15.3% 15.4% 14.0% 14.0%

- Savings % 18.8% 26.3% 29.6% 29.0% 29.0%

- Term % 71.3% 58.3% 54.9% 57.0% 57.0%

Borrowings 928,055 939,136 1,092,043 1,207,119 1,412,022



yoy growth (%) (9.6) 7.1 28.0 24.7 27.6

Shares in issue (m) 1,113.3 1,114.9 1,151.8 1,151.8 1,151.8

EPS (Rs) 33.8 36.1 44.7 55.8 71.2

EPS growth (%) (9.7) 6.9 23.9 24.7 27.6

PE (x) 26.4 24.7 19.9 14.0 10.9

Book value (Rs/share) 444.9 463.0 478.3 514.5 560.8

P/ Book (x) 2.0 1.9 1.9 1.5 1.4

RoAE (%) 7.8 8.0 9.7 11.2 13.2

Ratio analysis




Cost/Income 44.1 37.6 42.2 41.8 39.9



RoA 1.0 1.1 1.3 1.5 1.6

RoE 7.8 8.0 9.7 11.2 13.2

Tax/PBT 26.6 24.7 23.8 27.5 27.5


GrossNPA 4.3 5.1 4.5 4.8 4.8

Net NPA 2.1 2.2 1.1 1.4 1.4


Growth in customer assets (2.9) (10.4) 24.4 16.5 17.7

Growth in deposits (10.7) (7.5) 11.7 17.0 19.5

SLR ratio 20.4 23.1 19.2 20.0 20.0


Foreign65.5%

Public & others5.6%


Institutions24.9%

As of June 2011


IInndduussIInndd BBaannkk OUTPERFORMER (Rs264, MCAP: Rs123bn / US$2.5bn)




65

75

85

95

105

115

Oct

-10

Oct

-10

Oct

-10

Nov-

10

Nov-

10

Dec

-10

Dec

-10

Jan-

11

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep-

11

Sep-

11

Sep-

11

Oct

-11

IndusInd Bank Bankex

0.0

1.0

2.0

3.0

4.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.50

5.00

7.50

10.00Indusind Bank Ltd. - Price to Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 1.8 2.8 3.4 3.3 3.5 Non-fund rev./avg assets 1.8 1.8 1.8 1.9 1.8 Operating exp./avg assets 2.1 2.3 2.5 2.5 2.4 Prov./avg assets 0.4 0.4 0.3 0.4 0.4 PBT/Average assets 0.9 1.7 2.2 2.3 2.3 RoA 0.58 1.11 1.43 1.51 1.55 RoE 11.69 19.50 19.27 18.92 21.23 Gross NPA (%) 1.62 1.24 1.02 1.22 1.61 Gross NPA (Rs m) 2,550 2,550 2,659 4,254 7,231 Net NPA 1.14 0.50 0.28 0.20 0.17 Net NPA (Rs m) 1,790 1,018 728 690 747 Provisioning coverage 29.8 60.1 72.6 83.8 89.7

FY12E FY13E

3 yr beta 1.12 1.12









0.0

1.1

2.2

3.3

4.4

2009 2010 2011 2012 2013

0.0

0.2

0.4

0.6

0.8




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 4,590 8,864 13,765 17,213 23,411 yoy growth (%) 52.6 93.1 55.3 25.0 36.0 Other income 4,563 5,535 7,137 9,624 11,781 yoy growth (%) 53.3 21.3 28.9 34.9 22.4 Trading profits 1,216 1,110 404 1,000 1,000 Non trading income 3,347 4,424 6,733 8,624 10,781 Net revenue 9,153 14,399 20,902 26,837 35,191 Operating expenses 5,470 7,360 10,085 12,706 15,947 yoy growth (%) 36.0 34.5 37.0 26.0 25.5 Operating profit 3,682 7,039 10,817 14,131 19,244 yoy growth (%) 87.7 91.1 53.7 30.6 36.2 Provisions 1,408 1,708 2,019 2,278 3,628 of which NPA provisions 1,253 1,313 1,577 1,634 2,921 PBT 2,275 5,331 8,798 11,853 15,615 Provision for tax 792 1,827 3,025 4,030 5,309 PAT 1,483 3,503 5,773 7,823 10,306 yoy growth (%) 97.7 136.1 64.8 35.5 31.7

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 157,706 205,506 261,656 347,774 449,723

yoy growth (%) 23.3 30.3 27.3 32.9 29.3

Customer assets 158,630 206,262 279,776 372,235 481,522

yoy growth (%) 23.5 30.0 35.6 33.0 29.4

SLR portfolio 62,981 85,251 100,219 112,159 150,643


Total assets 276,147 353,695 456,358 580,522 751,194

Networth 14,276 21,656 38,249 44,427 52,672

Deposits 221,103 267,102 343,654 448,635 602,572

- Current % 13.4 16.5 18.3 20.0 21.0

- Savings % 5.9 7.2 8.9 9.5 10.5

- Term % 80.8 76.3 72.8 70.5 68.5

Borrowings 28,170 49,343 55,254 62,326 67,384



yoy growth (%) 97.7 136.1 64.8 35.5 31.7


EPS (Rs) 4.4 9.0 12.4 16.8 22.1

EPS growth (%) 87.4 104.8 37.6 35.5 31.7

PE (x) 60.1 29.3 21.3 14.3 10.8

Adjusted Book value (Rs/share) 37 52 82 97 116

P/ Adj Book (x) 7.1 5.1 3.2 2.5 2.1

RONW (%) 11.7 19.5 19.3 18.9 21.2

Ratio analysis




Cost/Income 59.8 51.1 48.2 47.3 45.3

Prov./avg assets 0.6 0.5 0.5 0.4 0.5


RoA 0.6 1.1 1.43 1.51 1.55

RoE 11.7 19.5 19.3 18.9 21.2

Tax/PBT 34.8 34.3 34.4 34.0 34.0


Gross NPA 1.6 1.2 1.0 1.2 1.6

Net NPA 1.1 0.5 0.3 0.2 0.2




SLR ratio 28.5 31.9 29.2 25.0 25.0


Foreign51.0%

Publ c & others9.7%


Institutions8.1%

Promoters19.5%

As of June 2011


IINNGG VVyyssyyaa BBaannkk OUTPERFORMER (Rs314, MCAP: Rs46bn / US$948m)




60

75

90

105

120

Oct

-10

Oct

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Apr

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Sep-

11

Sep-

11

Oct

-11

ING Vysya Bank Bankex

0.0

2.0

4.0

6.0

8.0

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

0.00

2.50

5.00

7.50

10.00ING Vysya Bank - Price to Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 2.3 2.5 2.8 3.0 3.0 Non-fund rev./avg assets 1.9 1.8 1.8 1.6 1.5 Operating exp./avg assets 2.7 2.5 2.8 2.7 2.5 Prov./avg assets 0.5 0.8 0.4 0.3 0.4 PBT/Average assets 1.0 1.1 1.3 1.6 1.7 RoA 0.66 0.74 0.87 1.02 1.11 RoE 12.50 12.69 13.44 13.89 14.60 Gross NPA (%) 1.87 3.01 2.34 2.28 2.29 Gross NPA (Rs m) 3,132 5,572 5,532 6,639 8,299 Net NPA 1.23 1.20 0.39 0.6 0.5 Net NPA (Rs m) 2,060 2,218 918 1,821 1,901 Provisioning coverage 34.2 60.2 83.4 72.6 77.1

FY12E FY13E

3 yr beta 0.97 0.97









0.00

1.00

2.00

3.00

4.00

5.00

2009 2010 2011 2012 20130.00

0.18

0.36

0.54

0.72

0.90

G NPAs % (IDFC Sec est) - LH S G NPAs implied (%) - LHS




Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 6,496 8,298 10,065 11,819 15,018 yoy growth (%) 30.3 27.7 21.3 17.3 27.1 Other income 5,477 5,895 5,950 6,532 8,411 yoy growth (%) 30.8 7.6 0.9 (0) 28.8 Trading profits 390 797 800 180 650 Non trading income 5,087 5,098 5,150 6,352 7,761 Net revenue 11,973 14,193 16,015 18,351 23,429 yoy growth (%) 30.6 18.5 12.8 10.0 27.7 Operating expenses 7,725 8,081 10,260 10,968 12,868 yoy growth (%) 26.7 4.6 27.0 6.9 17.3 Operating profit 4,248 6,112 5,755 7,383 10,561 yoy growth (%) 38.2 43.9 (5.9) 16.2 43.0 Provisions 1,302 2,704 1,516 732 1,864 PBT 2,946 3,715 4,839 6,749 9,103 yoy growth (%) 17.2 26.1 30.2 37.5 30.8 Provision for tax 1,059 1,293 1,652 2,261 2,957 PAT 1,888 2,422 3,187 4,390 5,743 yoy growth (%) 20.3 28.3 31.6 37.8 30.8

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Advances 167,509 185,072 236,021 2,91,628 3,62,635

yoy growth (%) 14.3 10.5 27.5 23.6 24.3

Customer assets 179,827 207,836 268,209 3,26,582 4,06,327

Total assets 318,570 338,802 390,141 4,58,764 5,70,626

Networth 15,941 22,199 25,160 38,320 43,143

Deposits 248,899 258,653 301,943 3,33,596 4,22,193

- Current % 12.6 15.1 17.7 15.0 16.0

- Savings % 13.7 16.8 16.9 17.0 17.0

- Term % 73.0 67.4 65.4 68.0 67.0

Borrowings 31,853 36,714 41,470 47,418 56,901


Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net profit (Rs mn) 1,888 2,422 3,186 4,390 5,740 yoy growth (%) 20.3 28.3 31.6 37.8 30.8 Shares in issue (mn) 102.6 120.0 121.0 148.4 148.4 EPS (Rs) 18.4 20.2 26.3 29.6 38.7 PE (x) 17.1 15.6 11.9 10.6 8.1 Adj. Bk value (Rs/share) 136.5 174.6 209.0 255.4 291.1 P/Adj. Book (x) 2.30 1.8 1.5 1.2 1.1 RoAE (%) 12.5 12.7 13.4 13.9 14.1

Ratio analysis




Cost/Income 64.5 56.9 64.1 58.3 55.0



RoA 0.7 0.7 0.9 1.0 1.1

RoE 12.5 12.7 13.5 13.9 14.1

Tax/PBT 35.9 34.8 34.1 34.0 34.0


Gross NPA 1.9 3.0 2.3 2.3 2.3

Net NPA 1.2 1.2 0.4 0.4 0.3



SLR Ratio 35.7 30.5 25.0 24.0 24.0


Foreign27.4%

Public & others9.5%

Non-promoter corporate holding

6.3%

Institutions12.8%

Promoters43.9%

As of June 2011


YYeess BBaannkk OUTPERFORMER (Rs283, MCAP: Rs98bn / US$2.0bn)




65

75

85

95

105

115

Oct

-10

Oct

-10

Oct

-10

Nov

-10

Nov

-10

Dec

-10

Dec

-10

Jan-

11

Jan-

11

Feb-

11

Feb-

11

Mar

-11

Mar

-11

Apr

-11

Apr

-11

Apr

-11

May

-11

May

-11

Jun-

11

Jun-

11

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep-

11

Sep-

11

Sep-

11

Oct

-11

Yes Bank Bankex

0.0

1.5

3.0

4.5

6.0

Jul/0

5

Jul/0

6

Jul/0

7

Jul/0

8

Jul/0

9

Jul/1

0

Jul/1

1

0.00

2.50

5.00

7.50

10.00Yes Bank Ltd. - Price to Adj. Book Value (x) Average(06-11) 10 yr G-Sec

Year to 31 March (%) FY09 FY10 FY11 FY12E FY13E Net int. margin/avg assets 2.6 2.7 2.6 2.5 2.6 Non-fund rev./avg assets 2.2 1.9 1.3 1.1 1.1 Operating exp./avg assets 2.1 1.7 1.4 1.3 1.2 Prov./avg assets 0.3 0.5 0.2 0.2 0.2 PBT/Average assets 2.3 2.5 2.3 2.2 2.2 RoA 1.52 1.61 1.52 1.45 1.47 RoE 20.65 20.27 21.13 23.34 24.86 Gross NPA (%) 0.68 0.27 0.23 0.29 0.35 Gross NPA (Rs m) 849 602 805 1,288 2,061 Net NPA 0.33 0.06 0.03 0.04 0.02 Net NPA (Rs m) 412 130 92 162 131 Provisioning coverage 51.5 78.4 88.6 87.4 93.6

FY12E FY13E

3 yr beta 1.33 1.33









0.00

0.40

0.80

1.20

1.60

2009 2010 2011 2012 20130.0

0.2

0.3

0.5

0.6



Year to 31 March (%) FY11 FY12E FY13EImplied ROA 1.45 1.24 Implied pre-tax ROA 2.19 1.87 Implied Decline from our est (0.01) 0.34 Of this: Assumed decline in NIMs 0.05 0.15 Of this: Assumed Rise in provisions (0.06) 0.19 At coverage of : 70% 70%Addition to GNPA (% of assets) (0.00) 0.41 Addition to GNPA (% of loans) (0.01) 0.69 Total GNPA outstanding (%) 0.23 0.23 0.92 yoy rise (%) (2.4) 302.7 Total GNPA outstanding (Rs m) 803 1,019 5,334 yoy rise (%) 26.8 423.5


Income statement

Year to 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13E Net interest income 5,112 7,880 12,469 16,689 22,328 yoy growth (%) 51.8 54.1 58.2 33.8 33.8 Other income 4,350 5,755 6,233 7,763 9,585 yoy growth (%) 22.7 32.3 8.3 24.5 23.5 Trading profits 1,486 986 (464) 1,171 1,346 Non trading income 2,864 4,769 6,696 6,592 8,239 Net revenue 9,462 13,635 18,702 24,452 31,913 yoy growth (%) 36.9 44.1 37.2 30.7 30.5 Operating expenses 4,185 5,002 6,798 8,576 10,914 yoy growth (%) 22.7 19.5 35.9 26.2 27.3 Operating profit 5,277 8,633 11,904 15,876 21,000 yoy growth (%) 50.7 63.6 37.9 33.4 32.3 Provisions 617 1,368 982 1,094 1,646 of which NPA provisions 571 876 393 412 804 PBT 4,659 7,265 10,922 14,781 19,353 yoy growth (%) 52.0 55.9 50.3 35.3 30.9 Provision for tax 1,621 2,487 3,650 4,952 6,483 PAT 3,038 4,777 7,271 9,830 12,870 yoy growth (%) 51.9 57.2 52.2 35.2 30.9

Balance sheet

As on 31 Mar (Rs m) FY09 FY10 FY11 FY12E FY13EAdvances 124,031 221,931 343,636 446,727 580,745

yoy growth (%) 31.5 78.9 54.8 30.0 30.0

Customer assets 148,345 255,339 424,317 531,442 673,932

yoy growth (%) 35.8 72.1 66.2 25.2 26.8

SLR portfolio 46,801 67,865 107,473 166,139 213,298


Total assets 229,008 363,825 590,070 769,537 980,073

Networth 16,242 30,895 37,941 46,296 57,235

Deposits 161,694 267,986 459,389 601,917 771,315

- Current % 7.5 9.1 8.6 10.0 11.0

- Savings % 1.2 1.5 1.8 1.5 2.0

- Term % 91.3 89.5 89.7 88.5 87.0

Borrowings 37,017 47,491 66,909 90,327 117,425



yoy growth (%) 51.9 57.2 52.2 35.2 30.9

Shares in issue (m) 297.0 339.7 347.1 347.1 347.1

EPS (Rs) 10.2 14.1 20.9 28.3 37.1

EPS growth (%) 47.2 37.5 48.9 35.2 30.9

PE (x) 27.7 20.1 13.5 8.7 6.6


P/ Adj. Book (x) 5.2 3.1 2.6 1.8 1.5

RONW (%) 20.6 20.3 21.1 23.3 24.9

Ratio analysis




Cost/Income 44.2 36.7 36.3 35.1 34.2



RoA 1.5 1.6 1.5 1.4 1.5

RoE 20.6 20.3 21.1 23.3 24.9

Tax/PBT 34.8 34.2 33.4 33.5 33.5




SLR ratio 26.5 23.4 21.8 24.0 24.0


Foreign53.7%

Public & others11.3%

Non-promoter corporate holding1.6% Institutions

7.0%

Promoters26.5%

As of June 2011


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