SBI: Who Says Elephants Can’t Dance?

SBI: Who Says Elephants Can’t Dance?

This famous quote made popular by Louis V. Gerstner, Jr.’s, who

served as the Chairman and CEO of IBM from April 1993 until
March 2002, memoir with the same title, aptly summarizes the
latest quarterly performance by State Bank of India, the country’s
largest commercial Bank in terms of profits, assets, deposits,
branches and employees.

Read on…

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SBI: Who Says Elephants Can’t Dance?

Major highlights of the bank’s ‘standalone’ performances for Q3

and 9-M (9-month period) for FY 2010-11 include:

Top line
Net Interest Income (NII) up 44.36% in 9-month and 43.28%
in Q3.
In fact, NII, in absolute as well as in % terms, in all 3 quarters
of the current financial year, FY11, are among the highest in
the last ten quarters.
Fee Income was up 27.25% in 9-M and 13.12% in Q3.

Cost
Cost to income ratio has declined substantially by 639 bps
YOY to 45.72% as on Dec’10 from 52.11% as on Dec’09.
Compared to March 10, it has come down by 687 bps from
52.59%.
CASA ratio was up by 523 bps to 48.17% (48.36% including
interbank deposits). CASA deposits growth at 27.71%. CASA
ratio.
Cost of deposits came down by 72 bps from 5.92% to 5.20%.
Growth in Interest Expenses was lower on account of robust
growth in CASA. Interest Expenses on deposits fell 5.2% YOY
for 9MFY11; however, the same grew by 3.22% during Q3.
In a major surprise, operating costs on account of salaries
was down by 9.295 for 9MFY11.

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SBI: Who Says Elephants Can’t Dance?

Bottom line
Operating profit was up 46.69% in 9M and 46.48% in Q3
Net profit grew by 12.94% in 9M and 14.08% in Q3
Net Interest Margin rose 84 bps from 2.56% to 3.40% YOY in
December’10 & at 3.61% during Q3FY11. In fact, a major
highlight of the bank’s performance has been the
consistent rise in its NIM for the five consecutive quarters
beginning Q3FY’09.
Return on Assets (ROA) up 2 bps from 0.94% to 0.96%
PCR up by 788 bps YOY from 56.19% to 64.07%.

Amongst other highlights, the bank’s Advances grew from

19.15%, as on December 31, 2009, to 21.88%, as on December
31, 2010; though Advances market share declined marginally
from 16.88% to 16.77%, during the said period. Further,
according to the bank, the advances grew at 74% y-o-y in
Q3FY11 while the sequential growth was much sharper at 502%,
during the same quarter.

Further, deposits growth at 14% y-o-y in December’10 was better

that 11.26% recorded in the same month a year ago, and much
better from 8.36% in March’10. It could also grow its demand
deposits market share from 15.35% in Dec’09 to 16.77% in
Dec’10; but it witnessed a decline in deposits market share from
16.76% to 16.52%, during the same period.

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SBI: Who Says Elephants Can’t Dance?

Where the bank further impresses with its performance is the

efficiency parameters. Its Net Interest Margin* (NIM), a key
metric, rose sharply from 2.82% in Q3FY10 to 3.61% in Q3FY’10.
Also, the bank’s cost to income ratio improved from 52.11% to
45.72%, during the said period. Besides, there was also
significant improvement in cost of deposits which fell from 5.92%
in Q3FY10 to 5.20% in Q3FY11.

Net Interest Margin (NIM) is the difference between interest

earned and interest expended as a proportion of average total
assets.

The bank’s Net NPA stood at 1.61%, as of Dec’10, which was

significantly lower from 1.88%, recorded in the same month a
year ago.

As per Basel II CRAR of the Bank is at 13.16% (Tier I: 9.57%) as

at the end of Dec. 2010, compared to 13.77% last year. As per
Basel I CRAR is at 11.95% and Tier I is 8.69% as on Dec 10.

Carry on, SBI

The bank’s consistently good show in the last few quarters in

terms of all the key parameters is a clear indication that it is not
here to be bogged down by rivals, especially from private sector,

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SBI: Who Says Elephants Can’t Dance?

and that it will fight tooth and nail the battle for retaining its
market supremacy.

However, as the economy enters a hardening interest rate regime

courtesy the stubborn and the runaway food and oil prices led
inflation, repeating the past performance won’t be that easy.

However, for now, who can say elephants can’t dance?

No one, at least for now.

Keep up the good show, SBI.

Source: SBI

For refreshing business insights: log on to www.businessviewsreviews.blogspot.com

SBI: Who Says Elephants Can’t Dance?

For refreshing business insights: log on to www.businessviewsreviews.blogspot.com

SBI: Who Says Elephants Can’t Dance?

Source: SBI

For refreshing business insights: log on to www.businessviewsreviews.blogspot.com