ENAM Securities Sector avg.

upside: 5% to 15%
India Research (mkt cap wtd)

Banking Review: Q4FY10

Relative Performance

300
250
200
150
100
50
Apr‐09 Oct‐09 Apr‐10 Core performance maintained;
Sens ex BANKEX

Source: ENAM Research, Bloomberg

Behemoths underperform
Relative Performance

300
250
200
150
100
50
Apr‐09 Oct‐09 Apr‐10
Publ i c Sec. Ba nks
Pri va te Sec. Ba nks
Source: ENAM Research, Bloomberg

Praveen Agarwal Rajiv Pathak Sumit Agrawal

Executive Director – BFSI Asst VP – BFSI Asst VP – BFSI May 21, 20101
praveen.agarwal@enam.com (+91 22 6754 7609 ) rajiv.pathak@enam.com sumit.agrawal@enam.com
Sector Outlook…
™ Business outlook: Credit growth
‰ The Rs 1,511 bn net loan disbursement in Mar‐10 is the 1,600 30
(Rs bn) (% )
highest ever for any month in the past decade. This aided in 1,200
pushing up the industry wide credit growth to 17% 20
800
‰ The bankers and RBI are confident of achieving 20% credit
10
growth for the next year; and as the economy improves the 400
demand from industry (esp. infrastructure) and retail (esp. 0
0
housing and auto) is expected to drive the growth
‰ Banks continued to repay/ reprice high cost bulk deposits (400) (10)

Aug‐09
Apr‐09

Apr‐10
Jun‐09

Sep‐09
Oct‐09
Nov‐09
Dec‐09

Feb‐10
Mar‐09

May‐09

Jul‐09

Jan‐10

Mar‐10
and the incremental deposits were taken at competitive
rates. System wide low cost deposit improved with majority
of banks reporting improved CASA ratio MoM inc YoY (RHS)

™ Margins to witness some pressure Deposit growth

1,600 30
‰ Most banks continued to benefit from high cost bulk deposit (Rs bn) (%)
repricing and benign deposit rates 1,200 20
‰ Baring few banks, margin for banks improved QoQ (by ~16
bps) on the back of lower cost of deposits. 800 10
‰ Most of the repricing benefit is now behind us and the
400 0
coming quarters could witness increase in cost of funds (both
due to higher systemic interest rates and impact of increase 0 (10)

Apr‐09

Aug‐09

Apr‐10
Jun‐09

Sep‐09
Oct‐09
Nov‐09
Dec‐09

Feb‐10
Mar‐09

May‐09

Jul‐09

Jan‐10

Mar‐10
in interest on savings deposit)
‰ Banks – with agility to pass on the increase in cost of funds
and those with high CASA – would be better placed MoM inc YoY (RHS)
Source: RBI, ENAM Research.

2
Cont’d…
…Contd.
™ Increasing slippages especially in restructured loans
‰ NPAs increased with rising slippages in the restructured loans. Going forward, NPAs in restructured loans which are already
above 10% for some banks are likely to increase even further
‰ Banks are focusing on recoveries to off‐set some asset quality pressures
‰ Banks with lower coverage ratio such as SBI and ING Vysya may require aggressive provisioning over the next 2 quarters

™ Capital adequacy comfortable for most players; few PSBs likely to tap the equity market
‰ Private banks maintain higher Tier‐I capital as compared to PSBs. All private banks under our coverage (ICICI, HDFC Bank, Axis,
Yes, ING Vysya) have Tier‐I of 10%+
‰ Among PSBs, Union Bank’s Tier‐I dropped below 8% and would require capital infusion to maintain growth. Other large PSBs
(SBI, PNB, BoB) maintain Tier‐I of 9%+
‰ Numerous banks, especially PSBs, are likely to raise fresh capital in the coming quarters to support future growth and meet
regulatory requirements

™ Recommendation: With base rate regime coming up, most banks will witness a shift in pricing methodology of loans
that will help in pricing the risk adequately and supporting margins. Higher provisioning on incremental delinquencies to
be a challenge and banks already having more than 70% coverage to benefit. In a rising interest rate scenario, banks with
agility to re‐price their assets faster and those with high CASA would be in a better position to maintain margins and
bottom‐line growth.
We prefer:
‰ Among private banks: ICICI Bank, Axis and Yes Bank
‰ Among PSBs: PNB and OBC
‰ Among NBFCs: IDFC and PFC

3
 Comparative valuations
Comparative Valuations & Ratings (Average sector upside 5% to 15%)
Mkt. Cap CMP EPS (Rs.) Adj BV (Rs.) ROE (%) P/E (x) P/Adj.BV (x) Target Upside Relative to
(USD mn) (Rs) FY10 FY11E FY12E FY10 FY11E FY12E FY10 FY11E FY12E FY10 FY11E FY12E FY10 FY11E FY12E (Rs) (%) sector
Public
SBI 30,740 2,272 144 150 184 912 1,037 1,172 15 14 15 11.3 10.9 8.9 2.0 1.8 1.6 2,260 (1) Underperformer
PNB 6,654 990 124 148 181 495 617 769 27 26 25 8.0 6.7 5.5 2.0 1.6 1.3 1,176 19 Outperformer
BOI 3,600 322 33 41 52 221 252 296 14 15 17 9.7 7.9 6.1 1.5 1.3 1.1 326 1 Underperformer
BOB 5,293 682 84 97 115 367 444 540 24 23 23 8.1 7.0 5.9 1.9 1.5 1.3 800 17 Outperformer
Canara 3,618 414 74 83 100 277 350 439 27 24 24 5.6 5.0 4.1 1.5 1.2 0.9 483 17 Outperformer
Union 3,131 291 41 49 58 162 204 253 26 25 24 7.1 5.9 5.0 1.8 1.4 1.2 307 6 Neutral
OBC 1,693 317 45 55 71 273 323 381 16 17 19 7.0 5.8 4.5 1.2 1.0 0.8 419 32 Outperformer
Corp Bk 1,552 508 82 94 111 394 468 558 22 21 21 6.2 5.4 4.6 1.3 1.1 0.9 608 20 Outperformer
Private
ICICI BK 19,841 835 36 42 52 444 478 514 8 9 10 12.0 10.2 8.3 1.4 1.3 1.2 1,132 36 Outperformer
HDFC Bk 17,833 1,825 64 80 95 465 527 603 16 16 17 28.3 22.7 19.2 3.9 3.5 3.0 1,810 (1) Underperformer
Axis 10,530 1,218 62 77 93 390 451 526 19 18 19 19.6 15.8 13.1 3.1 2.7 2.3 1,420 17 Outperformer
YES 1,928 266 14 18 24 90 107 128 20 18 20 18.9 14.6 11.3 2.9 2.5 2.1 332 25 Outperformer
ING Vysya 781 305 20 26 33 173 198 227 13 13 15 15.1 11.9 9.2 1.8 1.5 1.3 364 19 Outperformer
NBFC
HDFC 16,668 2,715 95 106 124 610 671 746 18 16 17 15.8 14.1 12.1 4.2 3.6 3.1 3,020 11 Neutral
PFC 7,056 288 21 23 28 117 137 160 19 18 19 14.1 12.4 10.4 2.5 2.1 1.8 337 17 Outperformer
IDFC 4,199 151 8 9 11 53 60 70 16 17 17 14.1 11.7 10.0 2.7 2.3 2.0 200 32 Outperformer
REC 5,816 276 24 24 29 108 125 146 24 21 21 11.7 11.4 9.6 2.6 2.2 1.9 307 11 Neutral
Shriram. T.F 2,600 541 39 49 62 164 202 251 29 26 26 14.0 11.0 8.7 3.3 2.7 2.2 630 16 Outperformer
LIC HF 1,912 945 70 98 105 351 427 512 24 22 22 13.1 9.3 8.8 2.6 2.2 1.8 1,050 11 Neutral
Source: Company, ENAM estimates
Note: P/BV & P/E of ICICI Bank, SBI, HDFC, IDFC and LICHF are calculated after deducting the value of investments from price & the cost of investments from
reported BV .

4
Banking: Q4FY10 Earnings Review
™ Banks under our coverage reported 20% YoY growth in NII driven by 16% growth in credit and 34 bps
improvement in margin
‰ For banks such as Union, OBC and ING Vysya, the robust NII growth was led by margin improvement
‰ Sequential improvement in NII (especially Union and OBC) with margin expansion was higher than our estimates

™ While PAT for our coverage universe was flat YoY, private banks (ex. ICICI) outperformed with 34% YoY growth
‰ For PSBs, NPA provisions and sluggish non‐core income impacted the bottom‐line
‰ While BoB surprised us positively, BOI’s and Canara Bank’s PAT was much lower than expected due to provisioning hit

Net Income (INRm) NII (INRm) Adjusted PAT (INRm)

Company name Q4FY10 Q4FY09 YoY (%) Q3FY10 QoQ (%) Q4FY10 Q4FY09 YoY (%) Q3FY10 QoQ (%) Q4FY10 Q4FY09 YoY (%) Q3FY10 QoQ (%)
Banks 361,049 313,873 15 325,819 11 234,766 179,826 31 217,007 8 88,565 88,817 (0) 94,687 (6)
‐ PSBs 257,312 221,755 16 227,481 13 171,389 126,469 36 156,392 10 60,618 67,964 (11) 69,095 (12)
‐ Pvt. Bks 103,736 92,118 13 98,338 5 63,377 53,357 19 60,615 5 27,948 20,854 34 25,591 9
‐ Pvt. Bks (excl. ICICI) 64,479 53,993 19 61,026 6 43,028 31,968 35 40,034 7 17,892 13,416 33 16,610 8
Source: Company, ENAM Research.

™ Industry wide credit growth picked up to 17% YoY

‰ Loan book of banks under our coverage grew 16% YoY with PSBs outpacing their private sector peers. The growth of Pvt
sector banks was dragged due to ICICI. Excl. ICICI, the loan book of pvt banks under our coverage grew by 29%
‰ Yes, Axis and HDFC Bank among Pvt and BoB, Union and OBC among PSBs stood out in terms of loan growth

™ Sequential improvement in NIM for almost all banks, supported by fall in cost of funds and CASA improvement
‰ Decline in cost of deposits due to re‐pricing/ repayment of high cost bulk deposits more than compensated for the decrease
in yields on the loan book, thereby boosting NIM for almost all banks
‰ CASA improvement was noticeable in many banks with Corp Bk, SBI, ICICI, PNB and HDFC Bk being the biggest gainers

5
Improved profitability of insurance business
™ Growth: Overall new business premium grew by 25% YoY driven by a 34% growth reported by LIC
(dominated by single premiums). Private players also managed to register a growth of 12% YoY. Amongst
key players, SBI Life grew the highest at 31% YoY followed by HDFC Std Life (23% YoY) and Reliance Life
(12% YoY).
™ Profitability: Established players registered improved profitability with Bajaj Allianz, ICICI Pru Life and SBI
Life reporting strong bottomline. This is driven by a mix of lower operating expenses and moderation in
growth.
New Business Premiums: FY10 Top players: AUM, Profit and Capital
New business YoY Market share AUMs Net profit Capital
Players Players
premiums (Rs bn) growth (%) (%) (Rs bn) (Rs bn) (Rs bn)
SBI Life 70.4 31 6.4 SBI Life 287 2.76 10.0
ICICI Prudential 63.3 (7) 5.8 ICICI Prudential 573 2.58 47.8
Bajaj Allianz 44.5 (1) 4.1 Bajaj Allianz 334 5.57 12.1
Reliance Life 39.2 12 3.6 Reliance Life 137 (2.80) 29.7
HDFC Standard 32.6 23 3.0 HDFC Standard NA (2.75) NA
Birla Sunlife 29.6 5 2.7 Birla Sunlife 161 (4.35) 24.5
Max New York 18.5 0 1.7 Max New York NA NA NA
Private Total 384.0 12 35.1
LIC 708.9 34 64.9
Grand Total 1,092.9 25 100.0

Source: Company, ENAM Research.

6
Credit growth picked up…
Credit growth (YoY)
100
(%) 79
80
60
40 30 ‰‰ Non‐food
21 21 22 22 22 23 23 27 28 Non‐foodcredit
creditgrowth
growth
16 17
20 10 improved
improvedto to17%
17%(from
(from
0 13% in Dec’09)
13% in Dec’09)
(17) ‰‰ While
(20) WhileSBISBIgrew
grewatatindustry
industry
average, other PSBs

Canara
PNB

BOB
OBC
ING Vys.

Ind. Bk

Union Bk

Corp Bk
HDFC Bk
ICICI

BOI

SBI

average, other PSBs

Axis

Yes Bk
Allhb. Bk
outpaced
outpacedthe theindustry
industry
growth
growth
Credit growth (QoQ) ‰‰ Axis’s
Axis’space
paceofofloan
loangrowth
growth
25 23 picked up in Q4
picked up in Q4 as as
(%)
19 compared
comparedto toQ3.
Q3.Like
Likeinin
20
15 Q3,
Q3,Yes
YesBank
Bankstoodstoodoutoutinin
14
15 terms
12
11 termsofofloan
loangrowth
growth
10
9 9 ‰‰ ICICI
10 7 7 ICICIBank’s
Bank’sloanloanbook
book
6 6 continued
4 continued to shrinkdue
to shrink dueto to
5
aadecline in retail loan
decline in retail loan
1
0 book
book
Canara
PNB

BOB
OBC
Ind. Bk

Union Bk

HDFC Bk

Corp Bk
ICICI

ING Vys.

BOI

SBI

Axis

Yes Bk
Allhb. Bk

Source: Company, ENAM Research.

7
 …while Deposit growth at 16% slowed to 5‐yr low…
Deposit growth YoY
80
(%) 66
60

40 ‰‰ Industry
19 20 21 22 22 23 25 25 25 26 Industrywide
widedeposit
deposit
17 growth
20 8 growthslowed
sloweddown
downtoto
4 16%
16% YoY as comparedto
YoY as compared to
0 18% in Q3FY10
18% in Q3FY10
(7)
(20) ‰‰ Low
Lowdeposit
depositrates
ratescoupled
coupled
PNB

BOB

Canara
OBC
ING Vys.
ICICI

SBI

HDFC Bk

BOI

Ind. Bk

Union Bk

Corp Bk
Axis

Yes Bk
Allhb. Bk
with
withrepayments
repaymentsofofhigh
high
cost
cost depositsresulted
deposits resultedinin
lower
lowergrowth
growthininterm
term
Deposit growth QoQ deposits
deposits
30
(%) ‰‰ ICICI’s
24
22 ICICI’sdeposit
depositcontinued
continuedoo
shrink
shrinkas
asthe
thebank
bank
20 discouraged
discouraged termdeposits
term deposits
12 13 13 12 12
and
and concentrated onCASA
concentrated on CASA
10 9 10 deposits
deposits
10 8 7
4 4
2
0

Canara
PNB

BOB
OBC
HDFC Bk

Ind. Bk

Union Bk

Corp Bk
ICICI

ING Vys.

SBI

BOI
Axis

Yes Bk
Allhb. Bk

Source: Company, ENAM Research.

8
…CASA improved for majority
™ Almost all private sector banks continued to witness CASA improvement

™ HDFC Bank reported highest CASA at 50%. On YoY basis, ICICI reported the biggest CASA gains as it aggressively reduced
the dependence on term deposits and reported 30% growth in CASA
QoQ Change CASA ratio YoY Change
Corp Bk (bps) 528 Corp Bk 28.6 (%) Corp Bk (289) (bps)
SBI 373 SBI 46.7 SBI 767

ICICI 210 ICICI 41.7 ICICI 1,300

Ind. Bk 135 Ind. Bk 32.9 Ind. Bk 40

PNB 131 PNB 40.9 PNB 202

HDFC Bk 100 HDFC Bk 50 HDFC Bk 560

Axis 73 Axis 46.7 Axis 373

OBC 54 OBC 25 OBC 123

ING Vys. 40 ING Vys. 32.6 ING Vys. 563

Yes Bk 39 Yes Bk 10.5 Yes Bk 176

Canara (39) Canara 29.1 Canara (161)

Allhb. Bk (42) Allhb. Bk 35 Allhb. Bk (9)
BOI (60) BOI 32.4 BOI 140

Union Bk (66) Union Bk 31.7 Union Bk 161

BOB (131) BOB 35.6 BOB 76

Source: Company, ENAM Research.

9
Margin improvement for almost all…
™ Despite a fall in cost of deposits, margins of Corp Bk, Indian Bk and BOI declined QoQ due to pressure on yields
™ Union Bk posted the biggest QoQ improvement in margins, as the fall in yields was more than compensated by
decrease in cost of deposits
QoQ Change NIM YoY Change
Union Bk (bps) 68 Union Bk 3.39 (%) Union Bk 70 (bps)
PNB 34 PNB 3.99 PNB 66
OBC 27 OBC 3.27 OBC 140
ING Vys. 18 ING Vys. 3.58 ING Vys. 103
HDFC Bk 10 HDFC Bk 4.4 HDFC Bk 20
Yes Bk 10 Yes Bk 3.2 Yes Bk 20

SBI 10 SBI 2.66 SBI (27)

Canara 9 Canara 2.8 Canara 2

Axis 9 Axis 4.09 Axis 72

Allhb. Bk 3 Allhb. Bk 3 Allhb. Bk 12

BOB 2 BOB 2.97 BOB (20)

ICICI 0 ICICI 2.6 ICICI 0

BOI (3) BOI 2.57 BOI (41)

Corp Bk (4) Corp Bk 2.5 Corp Bk 31

Ind. Bk (11) Ind. Bk 3.71 Ind. Bk 37

Source: Company, ENAM Research.

10
 ...as cost of deposits fell
™ Cost of Deposits is at a 3‐year low for most banks
™ BoB witnessed an increase in deposit cost due to an increase in its share of domestic deposits

QoQ Change CoD YoY Change

BOB (bps) 21 BOB 4.9 (%) BOB (bps) (78)

SBI (12) SBI 5.8 SBI (50)

Canara (13) Canara 6.1 Canara (75)

PNB (28) PNB 4.9 PNB (136)

Axis (29) Axis 4.5 Axis (210)

Yes Bk (30) Yes Bk 6.3 Yes Bk (250)

Allhb. Bk (38) Allhb. Bk 5.6 Allhb. Bk (78)

ING Vys. (44) ING Vys. 4.6 ING Vys. (243)

Union Bk (45) Union Bk 5.3 Union Bk (118)

BOI (47) BOI 4.8 BOI (128)

OBC (59) OBC 5.7 OBC (219)

Corp Bk (77) Corp Bk 5.4 Corp Bk (192)

Source: Company, ENAM Research.

11
Yield on advances continuing its downward trend
™ Yields declined for all however, the fall in cost of deposit provided the support to margins
™ Banks are of the view that yields can start improving once the base rate becomes effective from
1st July’10
QoQ Change YoA YoY Change

Yes Bk 9.7 (%) Yes Bk (330)

Yes Bk (bps) (60)

ING Vys. 9.8 ING Vys. (bps) (193)

ING Vys. (33)

Union Bk Union Bk 9.9 Union Bk (112)

(21)

SBI SBI 9.7 SBI (49)

(14)

PNB (22) PNB 10.2 PNB (96)

OBC (7) OBC 10.2 OBC (62)

Corp Bk (32) Corp Bk 9.9 Corp Bk (92)

Canara (20) Canara 9.8 Canara (98)

BOI (29) BOI 8.1 BOI (156)

BOB (37) BOB 8.2 BOB (111)

Allhb. Bk (43) Allhb. Bk 10.1 Allhb. Bk (48)

Source: Company, ENAM Research.

12
 Gross NPAs: sequential deterioration
™ Asset quality deteriorated for most banks due to slippages mainly in corporate and SME loans. Slippages in standard
restructured loans also added pressure

™ HDFC Bank was the only bank to have witnessed improvement both YoY and QoQ
QoQ Change GNPA YoY Change
Union Bk 28 Union Bk 2.2 Union Bk 39
(%)
ING Vys. 17 ING Vys. 2.96 ING Vys. 78
BOI 17 BOI 2.85 BOI 98
OBC 14 OBC 1.74 OBC 39
Axis 12 Axis 1.13 Axis 47
Yes Bk 11 Yes Bk 0.27 Yes Bk (29)
ICICI 6 ICICI 5.06 ICICI (2)
BOB 6 BOB 1.36 BOB 30
Allhb. Bk 5 Allhb. Bk 1.69 Allhb. Bk 13
SBI 4 SBI 3.05 SBI 25
PNB 2 PNB 1.71 PNB 16
Ind. Bk (1) Ind. Bk 0.81 Ind. Bk 11

Canara (1) Canara 1.52 Canara 19

HDFC Bk (8) HDFC Bk 1.43 HDFC Bk (9) (% chg in absolute GNPA)
Corp Bk (% chg in absolute GNPA) Corp Bk 1.02 Corp Bk 16
(13)

Red denotes deterioration

Source: Company, ENAM Research. Green denotes improvement
13
Provisioning coverage: most banks safe home
™ Banks with lower coverage ratio such as ING Vysya, ICICI, Provision coverage
Canara and SBI have increased the NPA provisioning HDFC Bk 79
during Q4 in a bid to improve the coverage ratio 70% coverage
Yes Bk 78 ratio stipulated
by RBI
™ ICICI Bank has got an extension from RBI to meet the 70% BOB 75

coverage upto Mar’11 (Sept’10 for all other banks). BOI Ind. Bk 72 22
and ING Vysya would be able to achieve 70% coverage by Corp Bk 70 11
Sept’10. SBI has requested for an extn of deadline from PNB 69 12
RBI Axis 68 21

QoQ increase/ (decrease) in coverage ratio Union Bk 63 11

30 Allhb. Bk 61 18
(%) 22
20 ING Vys. 59
8 9 10
10 4 4 6 6 ICICI 58

0 BOI 54 12
(10) (5) (4) (3)
(7) (7) OBC 50 27
(10)
(20) (19) SBI 44 15
(30) Canara 30 48 (%)
PNB

BOB
OBC

Corp Bk

HDFC Bk
BOI

SBI

Axis

Yes Bk
Allhb. Bk

Ind. Bk

Union Bk

ING Vys.
ICICI
Canara

Prov incl w/off loans

Source: Company, ENAM Research.

14
 Net NPAs: A mixed bag
™ Most banks made aggressive NPA provisioning resulting in lower QoQ NPAs despite increase in gross NPAs
(especially SBI, ICICI, Yes and ING Vysya)

QoQ Change NNPA YoY Change

Allhb. Bk 107 Allhb. Bk 0.66 (%) Allhb. Bk 11
Ind. Bk 62 Ind. Bk 0.23 Ind. Bk 54
Union Bk 57 Union Bk 0.81 Union Bk 196
BOI 38 BOI 1.31 BOI 251
OBC 25 OBC 0.87 OBC 66
BOB 24 BOB 0.34 BOB 34
PNB 21 PNB 0.53 PNB 272
Axis (2) Axis 0.36 Axis 28
SBI (4) SBI 1.72 SBI 14
Canara (9) Canara 1.06 Canara 19
ICICI (12) ICICI 2.12 ICICI (16)
Yes Bk (20) Yes Bk 0.06 Yes Bk (68)
Corp Bk (24) Corp Bk 0.31 Corp Bk 43
ING Vys. (24) ING Vys. 1.2 ING Vys. 11
HDFC Bk (28) (% chg in absolute NNPA) HDFC Bk HDFC Bk (38) (% chg in absolute NNPA)
0.3

Red denotes deterioration

Source: Company, ENAM Research. Green denotes improvement

15
Restructured assets at a glance (Q4FY10)
™ Except for banks such as Axis, HDFC Bank and Yes Bank, most banks witnessed an increase in
restructured loans during Q4 leading to an increase in the total restructured loans
™ NPAs in restructured loans increased too. PSBs such as BOI experienced ~19% slippage, Union ~11%,
SBI‐ ~9% and Pvt Banks like Axis witnessed ~15% slippage. For other banks, slippages were in the range
of 5%‐8%
Restructured loans as % of total loan book
8
(%)
6.7
6.4
6 5.4

4.3 4.5
4.0 4.2
4
2.8
2.2
1.9
2

0.3 0.4
0
HDFC Bk Yes Bk ING Vys. Axis ICICI Union Bk SBI Corp Bk Canara BOI PNB OBC

Source: Company, ENAM Research.

16
Capital Adequacy comfortable for most banks
™ Almost all, pvt banks have adequate capital to support their growth plans over the next two years
™ Among PSBs, Union would need Tier‐I capital and the government is likely to support them since their Tier‐I is
below 8%. SBI is likely to tap the capital markets in the next 4‐8 quarters
Tier‐I Tier‐II Total CAR
ICICI 14 ICICI 5.4 ICICI 19.4

HDFC Bk 13.3 HDFC Bk 4.1 HDFC Bk 17.4

Yes Bk 12.9 Yes Bk 7.8 Yes Bk 20.6

Axis 11.2 Axis 4.6 Axis 15.8

Ind. Bk 11.1 Ind. Bk 1.6 Ind. Bk 12.7

ING Vys. 10.1 ING Vys. 4.8 ING Vys. 14.9

SBI 9.5 SBI 3.9 SBI 13.4

OBC 9.3 OBC 3.3 OBC 12.5

Corp Bk 9.3 Corp Bk 6.1 Corp Bk 15.4

BOB 9.2 BOB 5.2 BOB 14.4

PNB 9.2 PNB 5.0 PNB 14.2

Canara 8.5 Canara 4.9 Canara 13.4

BOI 8.5 BOI 4.5 BOI 12.9

Union Bk Union Bk 12.5 (%)

7.9 (%) Union Bk 4.6 (%)
Source: Company, ENAM Research.

17
PAT impacted by non‐interest income and provisions
™ NII growth did not translate to bottomline growth due to declining non‐interest income and higher provisions (NPAs,
wage hike and pension)
™ OBC’s 115% NII growth pulled up the PAT, for Yes both income streams grew at a high rate, for ICICI – opex efficiency
and lower provisioning boosted PAT. Provisions negatively impacted banks such as BOI, SBI and Canara

PAT growth (YoY) NII growth (YoY) Non‐Interest Income growth (YoY)
OBC (%) 75 OBC (%) 115 OBC (22) (%)
Yes Bk 75 Yes Bk 63 Yes Bk 68
ICICI 35 ICICI (5) ICICI 13
HDFC Bk 33 HDFC Bk 27 HDFC Bk (19)
Axis 32 Axis 41 Axis 10
PNB 31 PNB 40 PNB 0
Union Bk 28 Union Bk 51 Union Bk (12)
Corp Bk 20 Corp Bk 49 Corp Bk (45)
BOB 10 BOB 19 BOB (10)
Ind. Bk 4 Ind. Bk 40 Ind. Bk 0
ING Vys. (3) ING Vys. 52 ING Vys. 1
Allhb. Bk (15) Allhb. Bk 25 Allhb. Bk (12)
Canara (30) Canara 22 Canara (16)
SBI (32) SBI 39 SBI (4)
BOI (47) BOI 8 BOI (8)

Source: Company, ENAM Research.

18
Lower treasury gains impacted non‐core income
Treasury/Non Interest Income Treasury Income contribution
Union Bk (bps) 35 Banks Treasury Inc (Rs mn) Treasury / PBT (%)
Q4FY09 Q3FY10 Q4FY10 Q4FY09 Q3FY10 Q4FY10
Yes Bk 30 HDFC Bk 2,436 (265) (473) 27 (2) (4)
BOI 19 Corp Bk 2,909 368 119 63 9 3
PNB 2,384 856 565 18 6 3
BOB 16 OBC 1,573 508 275 35 12 8
Axis 1,662 1,700 1,027 19 17 9
Canara 16
BOB 3,009 1,393 1,254 27 14 11
Axis 11 ICICI 2,140 (260) 1,960 20 (2) 14
SBI 15,089 4,370 4,256 39 12 15
ICICI 10 Canara 3,490 2,950 1,140 38 23 16
Union Bk 2,270 1,310 1,720 36 17 21
OBC 10
Yes Bk 385 280 474 32 15 22
SBI 9 BOI 2,240 1,365 1,365 22 25 29

PNB 6

Corp Bk 4

HDFC Bk (5)

Source: Company, ENAM Research.

‰ Rising
‰ Rising bond
bond yields
yields impacted
impacted the
the treasury
treasury operation
operation whereby
whereby aa declining
declining trend
trend inin treasury
treasury profits
profits was
was
witnessed
witnessedacross
acrossbanks
banks
‰ Sequentially
‰ Sequentiallythough,
though,banks
bankssuch
suchas
asICICI,
ICICI,Union
Unionand
andYes
Yesmanaged
managedto
toimprove
improvetheir
theirtreasury
treasuryperformance
performance

19
Benchmarking at a glance

20
Benchmarking at a glance
Credit Growth (YoY) Deposit growth (YoY) LDR

Yes Bk (%) 79 Yes Bk 66 ICICI 90 (%)

Corp Bk 30 Canara 26 Yes Bk 83

Axis 28 Corp Bk 25 (%) SBI 79
HDFC Bk 27 BOB 25 HDFC Bk 75
Union Bk 23 Allhb. Bk 25 PNB 75
Canara 23 Union Bk 23 Axis 74
BOB 22 OBC 22 BOI 73
OBC 22 Ind. Bk 22 BOB 73
Allhb. Bk 22 BOI 21 Canara 72
Ind. Bk 21 Axis 20 ING Vys. 72
PNB 21 PNB 19 Union Bk 71
SBI 17 HDFC Bk 17 Ind. Bk 71
BOI 16 SBI 8 OBC 70
ING Vys. 10 ING Vys. 4 Allhb. Bk 68
ICICI (17) ICICI (7) Corp Bk 68

Source: Company, ENAM Research.

21
 Benchmarking at a glance
GNPA NNPA Provision coverage
ICICI 5.06 (%) ICICI 2.12 (%) HDFC Bk 79 (%)
SBI 3.05 SBI 1.72 Yes Bk 78
ING Vys. 2.96 BOI 1.31 BOB 75
BOI 2.85 ING Vys. 1.2 Ind. Bk 72
Union Bk 2.2 Canara 1.06 Corp Bk 70
OBC 1.74 OBC 0.87 PNB 69
PNB 1.71 Union Bk 0.81 Axis 68
Allhb. Bk 1.69 Allhb. Bk 0.66 Union Bk 63
Canara 1.52 PNB 0.53 Allhb. Bk 61
HDFC Bk 1.43 Axis 0.36 ING Vys. 59
BOB 1.36 BOB 0.34 ICICI 58
Axis 1.13 Corp Bk 0.31 BOI 54
Corp Bk 1.02 HDFC Bk 0.3 OBC 50
Ind. Bk 0.81 Ind. Bk 0.23 SBI 44
Yes Bk 0.27 Yes Bk 0.06 Canara 30

Source: Company, ENAM Research.

22
Benchmarking at a glance
NIM YoA CoD
HDFC Bk 4.4 (%) (%) Yes Bk 6.3 (%)
PNB 10.2
Axis 4.1
Canara 6.1
OBC 10.2
PNB 4
SBI 5.8
Ind. Bk 3.7 Allhb. Bk 10.1
OBC 5.7
ING Vys. 3.6
Union Bk 9.9
Union Bk Allhb. Bk 5.6
3.4
Corp Bk 9.9 Corp Bk 5.4
OBC 3.3
Yes Bk 3.2 ING Vys. 9.8 Union Bk 5.3
Allhb. Bk 3 BOB
Canara 9.8 4.9
BOB 3
PNB 4.9
Canara Yes Bk 9.7
2.8
BOI 4.8
SBI 2.7 SBI 9.7
HDFC Bk 4.7
ICICI 2.6
BOB 8.2
BOI 2.6 ING Vys. 4.6

Corp Bk 2.5 BOI 8.1 Axis 4.5

Source: Company, ENAM Research.

23
 Benchmarking at a glance

CASA Tier‐I CAR

HDFC Bk 50 (%) ICICI 14.0 (%) Yes Bk 20.6 (%)

Axis 46.7 HDFC Bk 13.3 ICICI 19.4

SBI 46.7 Yes Bk 12.9 HDFC Bk 17.4

ICICI 41.7 Axis 15.8

Axis 11.2
PNB 40.9 Corp Bk 15.4
Ind. Bk 11.1
BOB 35.6 ING Vys. 14.9
ING Vys. 10.1
Allhb. Bk 35 BOB 14.4
SBI 9.5
Ind. Bk 32.9 PNB 14.2
OBC 9.3
ING Vys. 32.6 Allhb. Bk 13.6
Corp Bk 9.3
BOI 32.4 Canara 13.4
BOB 9.2
Union Bk 31.7 SBI 13.4
PNB 9.2
Canara 29.1 BOI 12.9
Canara 8.5 Ind. Bk 12.7
Corp Bk 28.6
OBC 25 BOI 8.5 OBC 12.5

Yes Bk 10.5 Union Bk 7.9 Union Bk 12.5

Source: Company, ENAM Research.

24
Benchmarking at a glance
Non‐Interest Income/Net income Treasury/Non Interest Income Fee income/Non Interest Income

ICICI 46 (bps) Union Bk (bps) 35 HDFC Bk 105

(bps)

SBI 34
Yes Bk 30
OBC 89
Yes Bk 33
BOI 19
Axis 32 Axis 84
ING Vys. 30 BOB 16
SBI 82
Allhb. Bk 27 Canara 16
BOI 23
Axis 11 Yes Bk 70
Canara 22
ICICI 10 PNB 70
BOB 22
Corp Bk 21 OBC 10
BOB 61
HDFC Bk 19 SBI 9
Corp Bk 57
PNB 19
PNB 6
Union Bk 18 BOI 45
Corp Bk 4
Ind. Bk 16
HDFC Bk (5) Canara 36
OBC 13

Source: Company, ENAM Research.

25
 ENAM Securities Pvt. Ltd.
7, Tulsiani Chambers, Free Press Journal Marg, Nariman Point, Mumbai – 400 021, India..
Tel:‐ Board +91‐22 6754 7600; Dealing +91‐22 2280 0167;
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CONFLICT OF INTEREST DISCLOSURE
We, at ENAM, are committed to providing the most honest and transparent advice to our clients. However, given the nature of the capital markets, from time to time we are faced with situations that could give rise to
potential conflict of interest. In order to provide complete transparency to our clients, before we make any recommendations, we are committed to making a disclosure of our interest and any potential conflict IN
ADVANCE so that the interests of our clients are safe- guarded at all times. In light of this policy, we have instituted what we believe to be the most comprehensive disclosure policy among leading investment
banks/brokerages in the world so that our clients may make an informed judgment about our recommendations. The following disclosures are intended to keep you informed before you make any decision- in addition, we
will be happy to provide information in response to specific queries that our clients may seek from us.
Disclosure of interest statement (As of May 18, 2010) Axis BOB BOI Canara Corp. Bank HDFC HDFC Bank ICICI IDFC
1. Analyst/Associate ownership of the stock No No No No No No No No No
2. Firm ownership of the stock No No No No No No No No No
3. Directors ownership of the stock No No No No No No No Yes Yes
4. Investment Banking mandate No No No No No No No No No
5. Broking relationship Yes Yes No No Yes Yes Yes Yes Yes

Disclosure of interest statement (As of May 18 2010) ING Vysys OBC PNB PFC REC SBI UNBK Yes Bank LIC Hsg
1. Analyst/Associate ownership of the stock No No No No No No No No No
2. Firm ownership of the stock No No No No No No No No No
3. Directors ownership of the stock Yes No No Yes Yes Yes No Yes No
4. Investment Banking mandate Yes No No No No No No No Yes
5. Broking relationship No No Yes No No Yes Yes No No
We are committed to providing completely independent and transparent recommendations to help our clients reach a better decision.

This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice,
and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. The intent of this document is not in recommendary nature
Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the
merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors
Enam Securities Private Limited has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness or
fairness of the information and opinions contained in this document
The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject
to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval
Enam securities Private Limited, its affiliates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned
in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities
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This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of ENAM Securities Private Limited. The views expressed are those of
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Copyright in this document vests exclusively with ENAM Securities Private Limited. 26