SBI - Now operating matrix too comes under pressure - Emkay

Reco: REDUCE
CMP: Rs 2155
Target Price: Rs 1750

- SBI Q2FY13 NII at Rs109.7bn (+5% yoy) below est led by 23bps qoq contraction in NIM to 3.34%. However with lower provisioning, net profit atRs36.6bn (+30% yoy) inline with est.

- Core operating profit declines 6.5% yoy (-11% qoq) driven by disappointment on both NIMs (down 23bps qoq) and fee income (down 6% yoy) front

- Fresh slippages at Rs84.6bn (3.7% of loans). Net slippages (adj) remained higher at Rs55.8bn. Q2 saw restructuring of Rs46.9bn. Total addition to stressed assets at Rs131bn

- Pressure on margins, fewer avenues for fee income to retain pressure on operating matrix. Stressed assets continues to remain an issue. Maintain Reduce with TP of Rs1750

Source : Equity Bulls

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