Motilal Oswal's research report on State Bank of India
Asset quality review (AQR) of the RBI, harmonization of asset recognition with the parent, resultant NPA provisions and balance sheet consolidation continue to mar earnings at the associate banks (ABs) level. Interest reversals on SDR and S4A accounts, higher share of NPAs in 1H and a decline of 5% YoY in loans impacted the 3QFY17 NII performance (-22% YoY and 14% QoQ).
OutlookWe expect credit cost to remain elevated, led by focus on improving strength of the balance sheet. The stock trades at 0.9x FY18E consolidated BV and 10x FY18E consolidated EPS. Buy.
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