Review

STATE BANK OF INDIA

{Ticker : 500112 { FV: Rs. 1 { 52-Week H/L: Rs. 373.70/184.25

We had previously recommended State Bank of India (SBI) in volume no. 36, issue no. 10 (dated December 30, 2019), when the scrip was trading at Rs 329.85. SBI is a multinational, public sector banking and financial services statutory body.

The scrip was then recommended based on benefits of IPO listing of SBI cards to bank. Net interest income rose by 8.70 per cent to Rs 67,692 crore in Q3FY20 from Rs 62,277 crore in Q3FY19. Net profit increased significantly to Rs 5,583 crore in Q3FY20 from Rs 3,955 in Q3FY19.

GNPA ratio was 6.94 per cent in Q3FY20, down by 177 bps, as compared to 8.71 per cent in Q3FY19. Provision coverage ratio (PCR) improved significantly by 710 bps to 81.73 per cent as of December 2019, from 74.63 per cent of December 2018. CAR for Q3FY20 was 13.73 per cent and 12.77 for Q3FY19. For Q3FY20, credit growth was reported at 6.79% YoY which mainly driven by Retail- Personal Advances. While current account deposit grew by 9.27% YoY saving bank deposits grew by 8.19% YoY during Q3FY20.During the quarter, SBI exercised the option of lower tax rate taking a onetime hit of Rs 1,333 crore. SBI is set to hold 48.21 per cent stake in YES Bank with an investment of about Rs 6,050 crore. The bank's other business parameters seem to have a stable outlook. The gain from the SBI Cards IPO is expected to benefit the bank. Hence, we recommend a HOLD.