India PSU Banks

8/22/2019 India PSU Banks

1/26www.jpmorganmarkets.

Asia Pacific Equity Research19 May 2013

Equity Ratings and Price Targets

Mkt Cap Rating Price TargetCompany Symbol (Rs mn) Price (Rs) Cur Prev Cur PBank of Baroda BOB.BO 304,413.80 740.45 OW UW 850.00 625Bank of India BOI.BO 186,575.20 324.75 UW n/c 275.00 250Punjab National Bank PNBK.BO 282,959.70 834.25 OW UW 925.00 650State Bank of India SBI.BO 1,627,171.00 2,424.85 OW n/c 2,700.00 2,200Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 17 May 13.

India PSU banksBond rally signals improving fundamentals: upgradeBOB, PNB to OW

India

Banks

Seshadri K Sen, CFAAC

(91-22) 6157-3575

[email protected]

J.P. Morgan India Private Limited

Dhiren C Shah

(91-22) 6157 3576

[email protected]

J.P. Morgan India Private Limited

Josh Klaczek

(852) [email protected]

J.P. Morgan Securities (Asia Pacific) Limite

See page 21 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware ththe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singfactor in making their investment decision.

We upgrade BOB and PNB to OW on the back of a sharp rally in bondmarkets. We see the benefits extending beyond mere treasury gains wethink the imminent deposit and base rate cuts will be incrementallypositive for loan growth and asset quality. The bond rally also createsconducive conditions for a quick margin-accretive switch from excessSLR to loans. Elevated delinquencies remain a risk, but recoveries shouldimprove given the more aggressive intent shown in recent weeks. Weretain our ratings on SBI (OW) and BOI (UW) with raised price targets.

Interest rates headed down. We think the bond market rally (yieldsdown 60bp since early April) heralds a significant decline in lending anddeposit rates. CD rates have now slipped below retail deposit rates,

which is positive for loan growth and asset quality. Also, PSU bankshave a significant cushion on excess SLR which they can now liquidatein favor of loans to protect themselves against the margin pressures frombase rate cuts.

Asset quality pressure continues. We see a continued increase indelinquency on both NPLs and restructuring, and that is a worry.However, the recent efforts by PSU banks in cases such as KingfisherAirlines (covered by Princy Singh) point to some acceleration in badloan recoveries. We are not convinced that asset quality has turned thecorner, but believe it is unlikely to get much worse.

Valuations appear undemanding. Our upgrade is significantly led byvaluations. Both stocks are trading at


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Asia Pacific Equity Research

19 May 2013Seshadri K Sen, CFA(91-22) [email protected]

Earnings estimate revisions

Table 1: PSU banks valuation comparison

Mcap P/BV P/E ROEPrice ($ MM Rating PT Upside FY14E FY14E FY14E

Punjab National Bank 834 5,165 OW 925 11% 0.8 5.3 15.2%BOI 325 3,406 UW 275 -15% 0.7 6.2 9.9%Bank of Baroda 740 5,557 OW 850 15% 0.9 5.4 15.7%State Bank of India 2,425 29,701 OW 2,700 12% 1.1 6.2 17.8%

Source: Bloomberg, J.P. Morgan estimates. Share prices as of 17 May 2013.

Table 2: Estimate changes key financials

BOB BOI PNB SBINew % chg New % chg New % chg New % chg

NIIFY14E 145,045 3.3 116,862 3.8 179,286 2.9 771,767 3.0FY15E 167,926 2.7 132,430 3.1 204,136 4.3 914,186 3.0

PPOP FY14E 121,325 9.1 91,185 7.3 137,465 9.3 560,463 7.5FY15E 137,518 7.3 99,919 6.4 150,316 11.1 616,872 7.4

EPSFY14E 136.6 11.8 52.5 17.8 156.6 9.4 392.7 10.6FY15E 149.9 9.5 55.5 15.6 182.5 11.4 434.4 10.4

Source: J.P. Morgan estimates.

Higher NIMs

We now expect material deposit rate cuts across the sector. PSU banks have been

hurt by falling asset yields (both loans and credit substitutes) whereas deposit rates

have been sticky due to low deposit costs across the system. Bank CDs are now

>50bp below retail deposit rates we believe this anomaly will be corrected in the

near term.

Table 3: Lower deposit costs could provide material relief

PNB BOB BOI4Q FY13 4Q FY13 change in bp 4Q FY13 3Q FY13 change in bp 4Q FY13 3Q FY13 change in bp

YOA 8.50 8.83 (33.00) 11.33 11.57 (0.24) 9.11 9.42 (0.31)COF 5.40 5.70 (30.00) 7.41 7.33 0.08 6.39 6.77 (0.38)NIM 3.51 3.47 4.00 2.93 3.08 (0.15) 3.00 2.80 0.20

Source: Company reports and J.P. Morgan estimates. All numbers relate to domestic balance sheet

Bond profits

This is difficult to predict as it depends on the quantum that the banks choose to

realize in FY14. We have, for the moment, simply recognized the unwinding of

provisions made in 2H FY14. We see potential upside to these forecasts, but this

would probably be offset by higher provisions on account of falling rates (we have

already baked in the possible pension hits from higher wage growth assumptions).


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Figure 1: Proforma impact on earnings rom bond gains

Source: J.P. Morgan estimates, Company data.

Figure 2: CASA growth momentum picking up

Source: Company data.

Asset quality forecasts unchangedWe maintain our cautious view on NPLs and credit costs. The concurrent indicators

for the economy are still negative, and we think the momentum in delinquencies will

continue in the near term. We will revisit these only when we see material signs of a

turnaround.

Figure 3: Large base of stressed assets could get worse


Figure 4: Recoveries could accelerate in FY14


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PNBBOB

SBIBOI

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PNB SBI BOI BOB

Restructured loans Gross NPA

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PNB BOB BOI


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Strong rally in bond markets

Figure 5: Yield curve has shifted down laterally

Source: Bloomberg.

The white line is the latest gilt yield curve

Figure 6: Short- erm rates are down, despite duration-lengthening

Source: Bloomberg.

Figure 7: Repo liquidity still tight, but could be driven by excess SLR

Source: Bloomberg.

Figure 8: AAA yields well below base rates

Source: Bloomberg.

Figure 9: AAA yields collapse partial proxy o PSU lendingyields

Source: Bloomberg.

Figure 10: Short- erm rates are down, despite duration-lengthening

Source: Bloomberg.

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AAA (3y) SBI PNB BOB BOI

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Bank of Baroda Bank of Baroda (BOB) has emerged from the last downturn with the weakest

deposit franchise among its peers. To some extent, it therefore has the most to

gain from a systemic downward move in interest rates; also, the delta on its NIMscould be the highest. If rates do start moving down aggressively, BOB has

probably the largest potential upward surprise in NIMs.

The recent stress in BOBs asset quality is partially driven by delayed recognition

in 1H FY13. We thus think that delinquencies will peak soon, as the backlog of

stressed assets gets cleared over the next two quarters. Historically, BOB has

been one of the more conservative banks and, over the next 4-6 quarters, we

should see it emerging with a cleaner book than some of its peers.

We expect BOBs return ratios to stabilize at ~1% ROA and 15% ROE over

FY14/15. This could deliver an upward surprise when the asset quality cycle

turns, although we dont expect that in the near term. BOBs capital situation is

comfortable, in our view, so the risks of ROE dilution are minimal even if the

government capitalizes the bank in FY14.

Valuations look undemanding, with both P/BV and P/E trading well below the

historical average. In the macro context, the stock is not building in an economic

recovery the key risk is that the economy worsens from here, which could push

valuations down even further. We think the declining interest rates address that.

Figure 11: BOB: P/E history

Source: Company reports and J.P. Morgan estimates.

Figure 12: BOB: P/BV history


2345678

9101112

Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-1

PE1yf mean +1sd -1sd

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Company Description P&L sensitivity metrics PPOP EPSimpact (%) impact (%)

Bank of Baroda is the one of the largest publicsector banks in India, with a loan book ofcUS$52B. BOB is highly concentrated in westernIndia, with ~50% of its branches in Gujarat,Maharashtra, and Rajasthan. The governmentsstake increased to 57% following the recentcapital infusion.

NIMs

Impact of each 25bps 5.0% 8.5%

Cost to Income


Provisions/Assets


Source: J.P. Morgan estimates

Price target and valuation analysisOur Mar-14 PT of Rs850 (previously Rs625) is based on our 2-stage Gordon growth model and implies 1x FY14E book. Ourvaluations factor in a cost of equity of 14.9%, normalized ROEof ~14.7%, and terminal growth of 5%. Our PT change is

driven by the change in our second-stage growth assumption.

Sectoral breakdown Risk free rate 8.0%

Equity Risk Premium 6.0%

Beta 1.15

Cost of Equity 14.9%

Terminal growth 5.0%

Stage 2 growth 15.5%

Mar-14 PT 850

Normalized ROE

NII/assets 3.1%

Non Interest Income/Assets 0.8%

Opex/Assets 1.7%

LLP/Loans -1.0%

Source: Company Pre tax ROA 1.7%

Normalized ROA 1.2%

Adjusted EPS: J.P. Morgan vs consensus Nomalized ROE 14.7%

Rs J. P. Morgan Consensus Source: J.P. Morgan estimates

The key risks are a) NPL momentum surprises on the downsidefrom here, due to either macro factors or higher rollovers fromrestructured loans, or b) bond yield momentum reverses fromglobal or local macro headwinds.

FY14E 136.6 127.0

FY15E 149.9 147.0

Source: Bloomberg, J.P. Morgan

Company Data

52-week Range (Rs) 899.65-605.55Market Cap (Rs mn) 304,414Market Cap ($ mn) 5,557Shares O/S (mn) 411Fiscal Year End MarPrice (Rs) 740.45Date Of Price 17 May 133M - Avg dai ly value (Rs mn) 641.903M - Avg daily value ($ mn) 11.73M - Avg daily volume (mn) 0.92BSE30 2,0247.33Exchange Rate 54.79

Bank of Baroda (Reuters: BOB.BO, Bloomberg: BOB IN)

Rs in mn, year-end Mar FY11A FY12A FY13E FY14E FY15E

Operating Profit (Rs mn) 65,381 80,229 87,028 115,825 132,518Net Profit (Rs mn) 42,417 50,070 45,535 57,728 63,318Cash EPS (Rs) 108.26 121.79 107.78 136.64 149.87Fully Diluted EPS (Rs) 99.76 109.51 98.99 123.62 138.04DPS (Rs) 16.50 17.00 15.46 19.60 21.50EPS growth (%) 29.4% 12.5 (11.5%) 26.8% 9.7%ROE 23.3% 19.1 14.3% 15.7% 15.2%P/E (x) 6.8 6.1 6.9 5.4 4.9BVPS (Rs) 504.55 668.34 732.33 846.03 970.75P/BV (x) 1.5 1.1 1.0 0.9 0.8Dividend Yield 2.2% 2.3 2.1% 2.6% 2.9%Source: Company data, Bloomberg, J.P. Morgan estimates.

14%

16%

17%38%

15%

Agri Retail SME Wholesale Others


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Bank of Baroda: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY11 FY12 FY13E FY14E FY15E FY11 FY12 FY13E FY14E FY15ENIM (as % of avg. assets) 2.8% 2.6% 2.4% 2.7% 2.7% Loans 30.7% 25.6% 14.2 17.8% 16.7%Earning assets/assets 98.0% 97.5% 97.3% 97.5% 97.5% Deposits 26.7% 26.0% 13.1 16.6% 15.6%Margins (as % of Avg. Assets) 2.8% 2.6% 2.4% 2.7% 2.7% Assets 28.9% 25.2% 13.0 16.4% 15.5%

Equity 43.4% 39.0% 12.6 15.5% 14.7%Net Interest Income 88,023 103,170 113,532 145,045 167,926 RWA 34.5% 20.9% 25.0 17.0% 16.0%

Total Non-Interest Income 23,657 28,148 32,295 37,785 44,209 Net Interest Income 48.2% 17.2% 10.0 27.8% 15.8%Fee Income 15,639 19,378 22,296 26,087 30,522 Non-Interest Income 13.6% 19.0% 14.7 17.0% 17.0%

of which Fee Grth 19.1% 23.9% 15.1 17.0% 17.0%Total operating revenues 111,679 131,319 145,827 182,831 212,135 Revenues 39.2% 17.6% 11.0 25.4% 16.0%

Costs 21.5% 10.3% 15.1 14.0% 18.8%Operat ing costs (46,298) (51,090) (58,799) (67,006) (79,617) Pre-Prov is ion Profit s 55.2% 22.7% 8.5 33.1% 14.4%

Loan Loss Provisions 90.9% 95.6% 61.2 5.6% 17.1%Pre-Prov. Profits 65,381 8 0,229 87,028 115,825 132,518 Pre-Tax 33.3% 6.6% (18.6%) 57.0% 11.2%Provisions (13,313) (26,046) (41,987) (44,355) (51,953) Attributable Income 38.7% 18.0% (9.1%) 26.8% 9.7%Other Inc (treasury Income) - - - - - EPS 29.4% 12.5% (11.5%) 26.8% 9.7%Other Exp. - - - - - DPS 65.0% 3.0% (9.1%) 26.8% 9.7%Exceptionals 4,435 6,075 4,000 5,500 5,000

Associate - - - - - Balance Sheet Gearing FY11 FY12 FY13E FY14E FY15EPre- ax 56,503 60,258 49,041 76,970 85,565 Loan/deposit 74.9% 74.7% 75.3 75.5% 75.8%Tax (14,086) (10,188) (3,506) (19,243) (22,247) Investment/assets 3.4% 3.1% 2.9 2.7% 2.4%

Minorities 0 0 0 0 0 Loan/Assets 64.3% 64.8% 65.3 66.0% 66.8%Attributable Income 42,417 50,070 45,535 57,728 63,318 Customer deposits/liab. 90.5% 91.7% 91.7 91.9% 92.0%

LT debt/liabilities 2.7% 3.2% 3.0 3.1% 3.3%

Asset Quality/Capital FY11 FY12 FY13E FY14E FY15E

Per Share Data FY11 FY12 FY13E FY14E FY15E Loan loss reserves/loans (1.0%) (1.0%) (1.2%) (1.8%) (2.4%)EPS 108.26 121.79 107.78 136.64 149.87 NPLs/loans 1.4% 1.5% 2.0 2.8% 3.6%DPS 16.50 17.00 15.46 19.60 21.50 Specific loan loss reserves/NPLs 7 4.9% 69.4% 54.3 53.5% 59.9%Payout 15.2% 14.0% 14.3% 14.3% 14.3% Growth in NPLs 31.3% 41.6% 78.7 56.1% 43.9%Book value 504.55 668.34 732.33 846.03 970.75 Tier 1 Ratio 10.0% 10.8% 10.1 9.9% 9.8%

Fully Diluted Shares 392 411 422 422 422 Total CAR 14.5% 14.7% 13.4 12.8% 12.4%Key Balance sheet Rs in millions FY11 FY12 FY13E FY14E FY15E Du-Pont Analysis FY11 FY12 FY13E FY14E FY15ENet Loans 2,286,764 2,873,773 3,276,101 3,833,038 4,446,324 NIM (as % of avg. assets) 2.8% 2.6% 2.4 2.7% 2 .7%LLR (23,616) (29,211) (38,291) (70,975) (111,088) Earning assets/assets 98.0% 97.5% 97.3 97.5% 97.5%

Gross Loans 2,310,380 2,902,984 3,314,392 3,904,014 4,557,412 Margins (as % of Avg. Assets) 2 .8% 2.6% 2.4 2 .7% 2.7%NPLs 31,525 44,647 79,774 124,518 179,174 Non-Int. Rev./ Revenues 21.2% 21.4% 22.1 20.7% 20.8%Investments 114,354 133,529 142,723 148,460 154,777 Non IR/Avg. Assets 0.7% 0.7% 0 .7 0.7% 0.7%

Other earning assets 62,254 107,146 115,345 134,169 154,807 Revenue/Assets 3.5% 3.3% 3.1 3.3% 3.3%Avg. IEA 3,107,779 3,923,131 4,636,306 5,329,302 6,178,098 Cost/Income 41.5% 38.9% 40.3 36.6% 37.5%Goodwill - - - - - Cost/Assets 1.5% 1.3% 1.2 1.2% 1.3%

Assets 3,571,722 4,473,215 5,053,003 5,881,231 6,791,899 Pre-Provision ROA 2.1% 2.0% 1.8 2.1% 2.1%LLP/Loans (0.7%) (1.0%) (1.4%) (1.2%) (1.2%)

Deposits 3,054,395 3,848,711 4,352,051 5,075,528 5,868,700 Loan/Assets 64.3% 64.8% 65.3 66.0% 66.8%

Long- erm bond funding 115,591 126,473 146,171 176,487 212,833 Other Prov, Income/ Assets 0 .1% 0.2% 0.1 0 .1% 0.1%Other Borrowings 0 0 0 0 0 Operating ROA 1.6% 1.3% 0.9 1.3% 1.3%Avg. IBL 2,814,279 3,572,585 4,236,703 4,875,118 5,666,774 Pre-Tax ROA 1.8% 1.5% 1.0 1.4% 1.4%

Avg. Assets 3,170,838 4,022,469 4,763,109 5,467,117 6,336,565 Tax rate 24.9% 16.9% 7.1 25.0% 26.0%Common Equity 197,682 274,769 309,397 357,436 410,127 Minorities & Outside Distbn. 0.0% 0.0% 0.0 0.0% 0.0%RWA 2,098,901 2,537,338 3,171,672 3,710,856 4,304,593 ROA 1.2% 1.1% 0.9 1.0% 0.9%Avg. RWA 1,829,906 2,318,119 2,854,505 3,441,264 4,007,725 RORWA 2.1% 1.9% 1.5 1.5% 1.5%

Equity/Assets 5.3% 5.9% 6.1 6.1% 6.1%ROE 23.3% 19.1% 14.3 15.7% 15.2%



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Bank of India

Lowest returns among PSU banks: Although we have increased our earnings

estimates for FY14 and FY15 by 18% and 16%, respectively, we expect ROE and

ROA for the bank to trend downwards in FY14-FY15 and remain the lowestamong the PSU banks. We expect the significant discount to persist, given its

weak fundamentals, high volatility in earnings and large international book.

Low provision coverage: The bank had one of the lowest provision coverages

among its peers at 32% in 4Q FY13. The earnings impact of improved

delinquency will thus be delayed, and could also put further strain on capital.

Lowest Tier-1 capital: Despite the bank raising capital in Mar-13, its tier-1

capital at 8.2% is the lowest among its peers. The bank will have frequent re-

capitalization by GOI, which could have a negative impact on the return ratios

and thereby valuations going forward. It could also affect growth.

Large international book: Given its very large international book 30% of

overall loans we believe it is more susceptible than peers to any negative

surprise on asset quality. So far the book has held up well, but given the overallweak macro environment and substantial part of the book to domestic corporates,

we expect asset quality to deteriorate.

Figure 13: BOI: T1 CAR is a worry

Source: Company data, J.P. Morgan estimates (FY13)

Figure 14: BOI: Provision coverage ratio (%)

Source: Company data. Note: Our calculations ignoring historic write-offs

Figure 15: BOI:P/BV history


Figure 16: BOI:P/E history


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Company Description P&L sensitivity metrics PPOP EPS

impact (%) impact (%)

Bank of India (BOI) is the fourth-largestpublic sector bank in the India, with a loanbook of US$48B, which grew at a ~25%CAGR over FY07-12. Overseas businessconstitutes ~30% of the loan book for BOI,which is one of the highest among PSU

banks.

NIMs


Cost to Income


Provisions/Assets



PT and valuation analysisOur Mar-14 PT for BOI of Rs275 (up from Rs250) is based on our 2-stage Gordon growth model and implies 0.6x FY14E book. Ourvaluations factor in a cost of equity of 15.5%, normalized ROE of 11%,and terminal growth of 5%. Our PT change is driven by our newsecond-stage growth and ROE assumptions.

Sectoral credit breakdown

Risk free rate 8.0%

Equity Risk Premium 6.0%

Beta 1.25



Stage 2 growth 13%

Mar-14 PT 275

Normalized ROE

NII/assets 2.8%

Non Int. Inc. 0.8%

Opex/Assets 1.8%

LLP/Loans -1.5%

Source: Company Pre tax ROA 0.9%

Normalized ROA 0.6%

EPS: J.P. Morgan vs consensus Nomalized ROE 11%

Rs J. P. Morgan Consensus Source: J.P. Morgan estimates

Key risks to our recommendation and price target are: 1) improvementin asset quality if economic growth bounces back; and 2) greater policysupport from the government, especially in rural lending

FY14E 52.5 57.8

FY15E 55.5 67.0

Source: Bloomberg, J.P. Morgan.

Company Data52-week Range (Rs) 393.00-253.30Market Cap (Rs mn) 186,575Market Cap ($ mn) 3,406

Shares O/S (mn) 575Fiscal Year End MarPrice (Rs) 324.75Date Of Price 17 May 133M - Avg da ily value (Rs mn) 324.173M - Avg daily value ($ mn) 5.93M - Avg daily volume (mn) 1.01BSE30 2,0247.33Exchange Rate 54.79

Bank of India (Reuters: BOI.BO, Bloomberg: BOI IN)

Rs in mn, year-end Mar FY11A FY12A FY13E FY14E FY15EOperating Profit (Rs mn) 50,624 62,844 69,446 86,185 94,919Net Profit (Rs mn) 24,887 26,775 27,525 31,353 33,130Cash EPS (Rs) 45.48 46.60 46.13 52.55 55.53

Fully Diluted EPS (Rs) 39.60 39.48 37.42 44.17 47.15DPS (Rs) 7.00 7.00 6.92 7.88 8.33EPS growth (%) 37.4% 2.5 (1.0%) 13.9% 5.7%ROE 15.1% 12.7 9.9% 9.9% 9.6%P/E (x) 7.1 7.0 7.0 6.2 5.8BVPS (Rs) 291.87 343.35 424.11 467.44 513.22P/BV (x) 1.1 0.9 0.8 0.7 0.6Dividend Yield 2.2% 2.2 2.1% 2.4% 2.6%Source: Company data, Bloomberg, J.P. Morgan estimates.

9%9%

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Agri Retail SME Large corp Overseas


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Bank of India: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY11 FY12 FY13E FY14E FY15E FY11 FY12 FY13E FY14E FY15ENIM (as % of avg. assets) 2.6% 2.4% 2.3% 2.6% 2.6% Loans 26.2% 16.3% 15.8 13.9% 14.0%

Earning assets/assets 94.5% 96.4% 96.6% 96.5% 96.7% Deposits 30.1% 6.5% 14.1 14.7% 12.9%

Margins (as % of Avg. Assets) 2.4% 2.3% 2.2% 2.5% 2.5% Assets 27.9% 9.6% 14.8 13.8% 11.6%Equity 24.8% 23.5% 28.3 10.2% 9.8%

Net Interest Income 78,107 83,134 90,376 116,862 132,430 RWA 26.5% 15.0% 39.0 12.8% 13.0%

Total Non-Interest Income 23,199 29,116 32,465 35,771 41,901 Net Interest Income 35.7% 6.4% 8.7 29.3% 13.3%Fee Income 16,835 18,608 21,958 25,471 30,056 Non-Interest Income 14.7% 25.5% 11.5 10.2% 17.1%

of which Fee Gr th 14.7% 10.5% 18.0 16.0% 18.0%

Total operating revenues 101,306 112,250 122,841 152,633 174,331 Revenues 30.2% 10.8% 9.4 2 4.3% 14.2%Costs 38.2% (2.5%) 8.1 24.4% 19.5%

Operating costs (50,682) (49,407) (53,395) (66,448) (79,411) Pre-Provision Profits 23.1% 24.1% 10.5 24.1% 10.1%Loan Loss Provisions (14.6%) 65.0% 43.0 12.0% 10.5%

Pre-Prov. Profits 50,624 62,844 69,446 86,185 94,919 Pre-Tax 40.2% 2.3% (15.9%) 37.1% 8.5%

Provisions (18,888) (31,164) (44,564) (49,931) (55,149) Attributable Income 42.9% 7.6% 2 .8 13.9% 5.7%

Other Inc (treasury Income) - - - - - EPS 37.4% 2.5% (1.0%) 13.9% 5.7%Other Exp. - - - - - DPS 0.0% 0.0% (1.1%) 13.9% 5.7%Exceptionals 3,218 4,096 5,200 5,000 5,000

Associate - - - - - Balance Sheet Gearing FY11 FY12 FY13E FY14E FY15E

Pre- ax 34,954 35,775 30,082 41,255 44,770 Loan/deposit 71.3% 78.2% 79.3 78.0% 78.1%Tax (10,067) (9,000) (2,557) (9,901) (11,640) Investment/assets 3.8% 4.0% 3.2 3.0% 2.8%

Minorities 0 0 0 0 0 Loan/Assets 62.1% 63.7% 65.8 66.1% 66.8%

Attributable Income 24,887 26,775 27,525 31,353 33,130 Customer deposits/liab. 89.5% 87.5% 87.5 88.0% 89.0%LT debt/liabilities 7.5% 7.8% 8.8 8.5% 8.0%


Per Share Data FY11 FY12 FY13E FY14E FY15E Loan loss reserves/loans (1.3%) (0.9%) (1.0%) (1.9%) (2.7%)EPS 45.48 46.60 46.13 52.55 55.53 NPLs/loans 2.5% 2.3% 2.7 3.7% 4.9%

DPS 7.00 7.00 6.92 7.88 8.33 Specific loan loss reserves/NPLs 57.1% 47.7% 34.4 39.4% 47.5%

Payout 15.4% 15.0% 15.0% 15.0% 15.0% Growth in NPLs (1.7%) 22.5% 48.1 63.3% 44.1%

Book value 291.87 343.35 424.11 467.44 513.22 Tier 1 Ratio 8.3% 8.6% 7.9 7.7% 7.5%Fully Diluted Shares 547 575 597 597 597 Total CAR 12.2% 12.0% 10.6 10.4% 10.1%

Key Balance sheet Rs in millions FY11 FY12 FY13E FY14E FY15E Du-Pont Analysis FY11 FY12 FY13E FY14E FY15ENet Loans 2,130,962 2,488,333 2,879,161 3,247,406 3,669,949 NIM (as % of avg. assets) 2.6% 2.4% 2.3 2.6% 2 .6%

LLR (28,666) (22,376) (27,939) (62,720) (102,719) Earning assets/assets 94.5% 96.4% 96.6 96.5% 96.7%Gross Loans 2,159,627 2,510,709 2,907,100 3,310,126 3,772,668 Margins (as % of Avg. Assets) 2 .4% 2.3% 2.2 2 .5% 2.5%

NPLs 48,116 58,940 87,311 142,546 205,438 Non-Int. Rev./ Revenues 22.9% 25.9% 26.4 23.4% 24.0%

Investments 162,477 129,483 137,620 145,288 154,085 Non IR/Avg. Assets 0.7% 0.8% 0 .8 0.8% 0.8%Other earning assets 124,132 114,657 130,566 152,297 145,212 Revenue/Assets 3.3% 3.1% 3.0 3.2% 3.3%

Avg. IEA 3,015,398 3,532,884 3,976,890 4,541,452 5,125,092 Cost/Income 50.0% 44.0% 43.5 43.5% 45.6%Goodwill - - - - - Cost/Assets 1.6% 1.3% 1.3 1.4% 1.5%

Assets 3,498,530 3,832,996 4,400,466 5,007,247 5,589,881 Pre-Provision ROA 1.6% 1.7% 1.7 1.8% 1.8%

LLP/Loans (1.0%) (1.3%) (1.6%) (1.6%) (1.6%)Deposits 2,988,858 3,182,160 3,629,988 4,161,839 4,700,684 Loan/Assets 62.1% 63.7% 65.8 66.1% 66.8%

Long- erm bond funding 220,213 321,142 366,625 390,603 415,261 Other Prov, Income/ Assets 0 .1% 0.1% 0.1 0 .1% 0.1%

Other Borrowings 91,598 93,655 103,655 113,655 123,655 Operating ROA 1.0% 0.9% 0.6 0.8% 0.8%

Avg. IBL 2,865,345 3,356,187 3,749,958 4,274,528 4,834,193 Pre-Tax ROA 1.1% 1.0% 0.7 0.9% 0.8%

Avg. Assets 3,116,954 3,665,763 4,116,731 4,703,857 5,298,564 Tax rate 28.8% 25.2% 8.5 24.0% 26.0%

Common Equity 159,712 197,259 253,043 278,894 306,210 Minorities & Outs ide Distbn. 0.0% 0.0% 0.0 0.0% 0.0%RWA 2,047,620 2,354,660 3,272,977 3,691,592 4,171,931 ROA 0.7% 0.6% 0.5 0.6% 0.5%

Avg. RWA 1,833,095 2,201,140 2,813,819 3,482,285 3,931,761 RORWA 1.2% 1.0% 0.8 0.8% 0.7%

Equity/Assets 4.6% 4.9% 5.5 5.7% 5.5%ROE 15.1% 12.7% 9.9 9.9% 9.6%



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11



Punjab National Bank

Deposit franchise improving. PNB showed strong improvement in deposit costs

in 4Q13, helped by low growth and CASA momentum. If rates start easing

rapidly, this trend could start to be accentuated in FY14 and drive significant

NIM benefits. Moreover, it could arrest the downward growth momentum seen in

FY13. The delta could be significant.

Recoveries accelerating. PNB had some forward momentum in bad loan

recoveries (upgrades, too, but that was offset by higher restructuring) in 4Q

FY13. We think this momentum could continue, given the strong efforts on the

part of the banks in this context, PNB has more to gain than the others given its

large base of NPLs.

Delinquencies could continue. We are worried that delinquencies could continue

despite the higher base of NPLs. We foresee the economy staying weak for a few

more quarters, and that could drive continued delinquencies. On the margin,

however, accelerated recoveries could offset that. We expect PNBs ROE to stabilize at 14-15% over FY15. The upside surprises

could come from better asset quality (PNB has probably the most leverage there)

and improved margins. Valuations appear undemanding and PNB is at a steep

discount to historical P/BV levels. Any improvement in fundamentals could

trigger a strong recovery, in our view.

Figure 4: PNB: P/E history


Figure 5: PNB: P/BV history


2

3

4

5

67

8

9

10

11



0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1




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12



Company Description P&L sensitivity metrics PPOP EPS

impact (%) impact (%)

Punjab National Bank (PNB) is thesecond-largest public sector bank inIndia, with a loan book size of ~US$54Bthat grew by ~25% over FY07-12. It hasone of the best liability franchises, with aCASA of ~36% leading to relatively high

NIMs among PSU banks.

NIMsImpact of each 10bps 4.0% 7.5%

Cost to Income


Provisions/Assets



Price target and valuation analysisOur Mar-14 PT for PNB of Rs925 (previously Rs650) is based onour 2-stage Gordon growth model and implies 0.9x FY14E book.Our valuations factor in a cost of equity of 15.2%, normalized ROEof ~11.5%, and terminal growth of 5%. Our PT change is driven byour new second-stage growth and ROE assumptions.


Sectoral breakdown Historic book growth (%) 20.3%

Stage-2 book growth (%) - FY13-18E 19.0%

Terminal growth (%) 5.0%

Mar-14 PT 925

Implied FY14E book multiple 0.9

Normalized ROE

NII/assets 3.1%

Non Interest Income/Assets 0.9%

Opex/Assets 1.8%

LLP/Loans -1.3%

Pre tax ROA 1.4%Normalized ROA 0.9%

Source: Company Nomalized ROE 11.5%


EPS: J.P. Morgan vs consensus

The key risks to our OW rating and PT are 1) a significant rollover toNPLs from restructured loans, which would negate the gains ofslowing delinquencies, and 2) declining branch productivity, whichwould affect the ability to aggressively cut deposit rates.

Rs J. P. Morgan Consensus

FY14E 156.6 158.5

FY15E 182.5 182.3


Company Data52-week Range (Rs) 922.10-659.00

Market Cap (Rs mn) 282,960Market Cap ($ mn) 5,165Shares O/S (mn) 339Fiscal Year End MarPrice (Rs) 834.25Date Of Price 17 May 133M - Avg da ily value (Rs mn) 631.193M - Avg daily value ($ mn) 11.53M - Avg daily volume (mn) 0.82BSE30 2,0247.33Exchange Rate 54.79

Punjab National Bank (Reuters: PNBK.BO, Bloomberg: PNB IN)

Rs in mn, year-end Mar FY11A FY12A FY13E FY14E FY15EOperating Profit (Rs mn) 87,534 102,631 114,536 130,765 143,816

Net Profit (Rs mn) 44,334 48,841 47,319 55,348 64,520Cash EPS (Rs) 139.94 144.00 133.87 156.59 182.53Fully Diluted EPS (Rs) 133.49 136.81 126.40 144.07 170.39DPS (Rs) 24.00 22.00 25.00 25.00 30.00EPS growth (%) 13.0% 2.9 (7.0%) 17.0% 16.6%ROE 23.3% 20.0 15.5% 15.2% 15.7%P/E (x) 6.0 5.8 6.2 5.3 4.6BVPS (Rs) 632.49 777.39 885.88 1,013.22 1,160.65P/BV (x) 1.3 1.1 0.9 0.8 0.7Dividend Yield 2.9% 2.6 3.0% 3.0% 3.6%Source: Company data, Bloomberg, J.P. Morgan estimates.

15%

10%

11%

33%

31%

Agri Retail SME Large corp Services and others


13/26

13



Punjab National Bank: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY11 FY12 FY13E FY14E FY15E FY11 FY12 FY13E FY14E FY15ENIM (as % of avg. assets) 3.6% 3.3% 3.2% 3.3% 3.3% Loans 29.5% 21.9% 15.7% 15.6% 15.5%Earning assets/assets 97.4% 97.4% 97.8% 98.1% 98.1% Deposits 25.5% 21.3% 13.3% 13.5% 13.4%Margins (as % of Avg. Assets) 3.5% 3.2% 3.2% 3.2% 3.2% Assets 27.7% 21.2% 12.8% 14.1% 14.1%

Equity 23.5% 31.6% 18.8% 14.4% 14.6%Net Interest Income 118,073 134,143 153,119 179,286 204,136 RWA 30.8% 17.3% 13.8% 16.6% 14.1%

Total Non-Interest Income 33,104 38,515 43,522 49,180 56,556 Net Interes t Income 38.5% 13.6% 14.1% 17.1% 13.9%Fee Income 24,502 29,788 33,661 38,037 43,742 Non-Interest Income 20.0% 16.3% 13.0% 13.0% 15.0%

of which Fee Grth 21.3% 21.6% 13.0% 13.0% 15.0%Total operating revenues 151,177 1 72,658 196,641 2 28,465 260,693 Revenues 34.0% 14.2% 13.9% 16.2% 14.1%

Costs 33.6% 10.0% 17.2% 19.0% 19.6%Operat ing costs (63,642) (70,028) (82,105) (97,700) (116,877) Pre-Provision Profits 34.2% 17.2% 11.6% 14.2% 10.0%

Loan Loss Provisions 75.3% 43.5% 30.9% 14.4% (2.0%)Pre-Prov. Profits 87,534 102,631 114,536 130,765 143,816 Pre-Tax 11.2% 7.2% 1.9% 17.0% 16.6%Provisions (24,920) (35,773) (46,841) (53,604) (52,559) Attributable Income 13.5% 10.2% (3.1%) 17.0% 16.6%Other Inc (treasury Income) - - - - - EPS 13.0% 2.9% (7.0%) 17.0% 16.6%Other Exp. - - - - - DPS 9.1% (8.3%) 13.6% 0.0% 20.0%Exceptionals 3,022 3,511 4,000 6,700 6,500

Associate - - - - - Balance Sheet Gearing FY11 FY12 FY13E FY14E FY15EPre- ax 65,637 70,369 71,695 83,861 97,757 Loan/deposit 77.4% 77.4% 78.5% 79.5% 80.7%Tax (21,303) (21,528) (24,376) (28,513) (33,237) Investment/assets 4.0% 4.6% 4.8% 4.4% 4.1%Minorities 0 0 0 0 0 Loan/Assets 64.5% 65.1% 66.1% 67.4% 68.2%

Attributable Income 44,334 48,841 47,319 55,348 64,520 Customer deposits/liab. 87.7% 88.2% 88.9% 88.4% 87.9%LT debt/liabilities 8.0% 8.7% 8.8% 9.1% 9.6%


Per Share Data FY11 FY12 FY13E FY14E FY15E Loan loss reserves/loans (0.9%) (1.4%) (2.0%) (2.5%) (2.9%)

EPS 139.94 144.00 133.87 156.59 182.53 NPLs/loans 1.8% 2.4% 3.3% 4.1% 4.9%DPS 24.00 22.00 25.00 25.00 30.00 Specific loan loss reserves/NPLs 58.9% 49.5% 52.1% 55.0% 55.0%Payout 17.2% 15.3% 18.7% 16.0% 16.4% Growth in NPLs 36.3% 99.1% 43.1% 44.2% 35.4%

Book value 632.49 777.39 885.88 1,013.22 1,160.65 Tier 1 Ratio 8.4% 9.3% 9.6% 9.5% 9.5%

Fully Diluted Shares 317 339 353 353 353 Total CAR 12.4% 12.6% 12.6% 12.1% 11.8%Key Balance sheet Rs in millions FY11 FY12 FY13E FY14E FY15E Du-Pont Analysis FY11 FY12 FY13E FY14E FY15E

Net Loans 2,421,067 2,937,748 3,378,410 3,885,171 4,467,947 NIM (as % of avg. assets ) 3.6% 3 .3% 3.2% 3.3% 3.3%LLR (22,968) (41,841) (68,609) (98,943) (134,003) Earning assets/assets 97.4% 97.4% 97.8% 98.1% 98.1%Gross Loans 2,444,034 2,979,588 3,447,019 3,984,114 4,601,950 Margins (as % of Avg. Assets) 3.5% 3.2% 3.2% 3.2% 3.2%

NPLs 43,799 87,196 124,744 179,897 243,642 Non-Int. Rev./ Revenues 21.9% 22.3% 22.1% 21.5% 21.7%Investments 152,867 226,467 235,632 248,461 263,216 Non IR/Avg. Assets 1.0% 0.9% 0.9% 0.9% 0.9%Other earning assets 82,591 97,929 79,705 90,490 102,674 Revenue/Assets 4.5% 4.1% 4.0% 4.1% 4.1%

Avg. IEA 3,273,795 4,060,962 4,753,382 5,411,685 6,177,793 Cos t/Income 42.1% 40.6% 41.8% 42.8% 44.8%Goodwill - - - - - Cost/Assets 1.9% 1.7% 1.7% 1.8% 1.9%Assets 3,768,541 4,567,445 5,153,065 5,880,063 6,711,703 Pre-Provision ROA 2.6% 2.5% 2.4% 2.4% 2.3%

LLP/Loans (1.2%) (1.3%) (1.5%) (1.4%) (1.2%)Deposits 3,128,987 3,795,885 4,301,498 4,883,975 5,536,678 Loan/Assets 64.5% 65.1% 66.1% 67.4% 68.2%Long- erm bond funding 315,897 372,643 428,358 512,975 622,972 Other Prov, Income/ Assets 0.1% 0.1% 0.1% 0.1% 0.1%

Other Borrowings 111,903 111,903 111,903 111,903 111,903 Operating ROA 1.9% 1.6% 1.4% 1.4% 1.4%Avg. IBL 3,065,402 3,806,706 4,449,192 5,063,403 5,778,300 Pre-Tax ROA 2.0% 1.7% 1.5% 1.5% 1.6%

Avg. Assets 3,359,973 4,167,993 4,860,255 5,516,564 6,295,883 Tax rate 32.5% 30.6% 34.0% 34.0% 34.0%Common Equity 200,378 263,675 313,135 358,145 410,257 M inorit ies & Outside Distbn. 0.0% 0.0% 0.0% 0.0% 0 .0%RWA 2,487,600 2,919,190 3,321,475 3,872,797 4,420,541 ROA 1.3% 1.1% 0.9% 0.9% 1.0%Avg. RWA 2,194,965 2,703,395 3,120,332 3,597,136 4,146,669 RORWA 1.9% 1.7% 1.4% 1.4% 1.5%

Equity/Assets 5.4% 5.6% 5.9% 6.1% 6.1%ROE 23.3% 20.0% 15.5% 15.2% 15.7%



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14



State Bank of India

Strong liability franchise: SBI has one of the strongest liability franchises and

thus has an advantage on the cost front with the lowest cost of funds among PSU

banks. This has resulted in the bank offering the lowest base rate and thereby

capturing market share. The bank is creating serious competition for privatebanks by offering the lowest prices in home loans. We expect this trend to result

in higher loan growth, and therefore higher profitability, for the bank in FY14.

Low restructured loan book: SBI has one of the lowest restructured loan books

among PSU banks, at 4.1% of loans. This implies that the bank has been upfront

in recognizing the stress on asset quality, and that any further negative surprises

in asset quality should be more limited than for other banks. We expect the bank

to re-rate from the current level as a result of an improvement in asset quality.

Lowest base rate: The advantage of having the lowest base rate is that it has

increased the level lending to high-rated corporates. This should result in better

asset quality for SBI, particularly in the weak macro environment. We also expect

the bank to show strong loan growth, and therefore higher profitability, in FY14.

Figure 6: SBI: P/E history (consol)


Figure 7: SBI: P/BV history (consol)


4

6

8

10

12

14

16

18

Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-1PE1yf mean +1sd -1sd

0.50.70.91.11.31.51.71.92.12.32.5

Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-1PB1yf mean +1sd -1sd


15/26

15



Company Description P&L sensitivity metrics EBITDA EPSimpact (%) impact (%)

State Bank of India (SBI) is the largestbank in India, with a 61.6% government

stake. It has a loan book of ~US$170Bwith exposure corporate, SME, retail,international and Agri sectors, and forms>20% of total system credit. It has thehighest number of branches and a strongrural presence, leading to high CASAof ~47%.

NIMs


Cost to Income


Provisions/Assets



Price target and valuation analysisOur Mar-14 PT of Rs2,700 (Rs2,200 previously) is based on ourGordon growth model with a normalized ROE of ~15.8%, 2nd-stagegrowth of ~14% and Rs108/share for the insurance business. Thechange in our PT change is due to our new second-stage growth andROE assumptions.

ROE 15.8%

Loan Breakdown 2nd stage growth 14.3%


Insurance business valuation 105

Mar-14 PT 2,700

Implied FY14 P/B ex insurance 1.2

Normalized ROE

NII/Assets 3.7%

Other income/assets 1.1%

Revenues/assets 4.8%

Costs/assets 2.1%

Provisions/assets 1.0%

Source: Company ROA 1.1%

ROE 15.8%

EPS: J.P. Morgan vs consensus

Rs J. P. Morgan Consensus Key risks:1) Slower economic growth leading to higher delinquencies2) Lower loan growth3) Rising restructuring leading to higher NPAs

FY14E 393 311

FY15E 434 366


Company Data52-week Range (Rs) 2,551.70-

1,815.15

Market Cap (Rs mn) 1,627,171Market Cap ($ mn) 29,701Shares O/S (mn) 671Fiscal Year End MarPrice (Rs) 2,424.85Date Of Price 17 May 133M - Avg daily value (Rs mn) 5,078.073M - Avg daily value ($ mn) 92.73M - Avg daily volume (mn) 2.32NIFTY 6169.90Exchange Rate 54.79

State Bank of India (Reuters: SBI.BO, Bloomberg: SBIN IN)

Rs in mn, year-end Mar FY11A FY12A FY13E FY14E FY15EOperating Profit (Rs mn) 321,781 428,572 427,037 536,463 592,872Net Profit (Rs mn) 111,798 159,733 202,096 268,605 297,141

Cash EPS (Rs) 176.06 238.04 295.45 392.68 434.39Fully Diluted EPS (Rs) 159.35 267.84 286.68 357.59 399.31DPS (Rs) 30.00 35.00 42.00 50.40 60.48EPS growth (%) (4.4%) 35.2% 24.1% 32.9% 10.6%ROE 12.1 18.9% 16.9% 17.8% 16.9%P/E (x) 13.8 10.2 8.2 6.2 5.6BVPS (Rs) 1,314.53 1,583.07 1,843.22 2,176.93 2,540.56P/BV (x) 1.8 1.5 1.3 1.1 1.0Dividend Yield 1.2 1.4% 1.7% 2.1% 2.5%Source: Company data, Bloomberg, J.P. Morgan estimates.

15%

18%

14%13%

17%

20%

3%

Large Mid SME Agri Intern Retai l Other


16/26

16



State Bank of India: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY11 FY12 FY13E FY14E FY15E FY11 FY12 FY13E FY14E FY15ENIM (as % of avg. assets) 3.1% 3.5% 3.3 3.5% 3.6% Loans 16.1 16.7% 17.6% 18.4 18.3%Earning assets/assets 96.2% 96.0% 95.9 96.0% 96.0% Deposits 12.5 12.7% 14.7% 18.6 18.9%Margins (as % of Avg. Assets) 2.9% 3.3% 3.2 3.4% 3.4% Assets 13.6 11.0% 14.4% 17.5 17.6%

Equity 0.4 27.3% 18.7% 18.1 16.7%Net Interest Income 455,500 578,778 620,714 7 71,767 914,186 RWA 16.7 11.0% 12.0% 14.0 14.0%

Total Non-Interest Income 184,197 318,354 330,724 355,848 383,087 Net Interest Income 36.2 27.1% 7.2% 24.3 18.5%Fee Income 0 0 0 0 0 Non-Interest Income 17.0 72.8% 3.9% 7.6 7.7%

of which Fee Grth - - - - -Total operating revenues 639,698 897,132 951,438 1,127,615 1,297,274 Revenues 30.0 40.2% 6.1% 18.5 1 5.0%

Costs 19.3 47.4% 11.9% 12.7 19.2%Operating costs (317,917) (468,560) (524,402) (591,153) (704,402) Pre-Provision Profi ts 42.7 33.2% (0.4%) 25.6 10.5%

Loan Loss Provisions 116.4 22.0% (21.9%) 21.0 8.6%Pre-Prov. Profits 321,781 428,572 427,037 536,463 592,872 Pre-Tax 8.5 23.6% 24.4% 32.9 10.6%Provisions (133,198) (162,444) (126,830) (153,485) (166,659) At tributable Income (4.4%) 42.9% 26.5% 32.9 10.6%Other Inc (treasury Income) - - - - - EPS (4.4%) 35.2% 24.1% 32.9 10.6%Other Exp. - - - - - DPS 0.0 16.7% 20.0% 20.0 20.0%Exceptionals 10,614 (19,999) 6,000 24,000 24,000

Associate - - - - - Balance Sheet Gearing FY11 FY12 FY13E FY14E F Y15EPre- ax 199,197 246,128 306,207 406,978 450,213 Loan/deposit 80.2 82.3% 83.9% 83.5 82.9%Tax (87,399) (86,395) (104,110) (138,372) (153,072) Investment/assets 5.8 5.9% 5.3% 4.7 4.3%Minorities 0 0 0 0 0 Loan/Assets 61.5 63.8% 66.3% 67.4 67.9%

Attributable Income 111,798 159,733 202,096 268,605 297,141 Customer deposits/liab. 80.4 82.2% 82.6% 83.4 84.3%LT debt/liabilities 9.0 9.2% 9.0% 8.4 7.8%


Per Share Data FY11 FY12 FY13E FY14E FY15E Loan loss reserves/loans (1.6%) (2.5%) (3.0%) (3.3%) (3.5%)

EPS 176.06 238.04 295.45 392.68 434.39 NPLs/loans 3.0 3.8% 4.7% 5.4 5.9%DPS 30.00 35.00 42.00 50.40 60.48 Specific loan loss reserves/NPLs 47.5 54.8% 58.0% 58.0 58.0%Payout 17.0% 14.7% 14.2 12.8% 13.9% Growth in NPLs 29.8 57.1% 41.1% 32.5 26.4%

Book value 1,314.53 1,583.07 1,843.22 2,176.93 2,540.56 Tier 1 Ratio 7.8 9.8% 10.1% 10.0 9.8%

Fully Diluted Shares 635 671 684 684 684 Total CAR 12.0 13.9% 13.7% 13.1 12.6%Key Balance sheet Rs in millions FY11 FY12 FY13E FY14E FY15E Du-Pont Analysis FY11 FY12 FY13E FY14E FY15E

Net Loans 10,064,015 11,636,702 13,614,941 16,065,631 18,957,444 NIM (as % of avg. assets ) 3.1 3.5% 3.3% 3 .5 3.6%LLR (160,431) (294,895) (415,592) (550,678) (696,204) Earning assets/assets 96.2 96.0% 95.9% 96.0 96.0%Gross Loans 10,224,447 11,931,597 14,030,533 16,616,309 19,653,648 Margins (as % of Avg. Assets) 2.9 3.3% 3.2% 3.4 3.4%

NPLs 323,163 507,735 716,538 949,445 1,200,351 Non-Int. Rev./ Revenues 28.8 35.5% 34.8% 31.6 29.5%Investments 968,601 1,065,152 1,019,940 1,105,005 1,200,574 Non IR/Avg. Assets 1.2 1.8% 1 .7% 1.6 1.4%Other earning assets 575,346 666,124 763,407 900,290 1,064,864 Revenue/Assets 4.1 5.2% 4 .9% 5.0 4.9%

Avg. IEA 14,875,001 16,665,528 18,786,609 21,804,573 25,635,534 Cost/Income 49.7 52.2% 55.1% 52.4 54.3%Goodwill - - - - - Cost/Assets 2.1 2.7% 2.7% 2.6 2.6%Assets 16,449,168 18,262,305 20,897,032 24,549,256 28,877,266 Pre-Provision ROA 2.1 2.5% 2.2% 2.4 2.2%

LLP/Loans (1.4%) (1.5%) (1.0%) (1.0%) (0.9%)Deposits 12,555,625 14,146,894 16,220,163 19,238,108 22,870,403 Loan/Assets 61.5 63.8% 66.3% 67.4 67.9%Long- erm bond funding 1,424,708 1,579,914 1,724,503 1,876,783 2,031,969 Other Prov, Income/ Assets 0.1 (0.1%) 0.0% 0.1 0.1%

Other Borrowings 437,576 485,245 450,423 4 50,423 450,423 Operating ROA 1.2 1.5% 1.5% 1.7 1.6%Avg. IBL 13,182,812 14,853,570 16,835,737 19,529,779 23,008,632 Pre-Tax ROA 1.3 1.4% 1.6% 1.8 1.7%

Avg. Assets 15,462,097 17,355,737 19,579,668 22,723,144 26,713,261 Tax rate 43.9 35.1% 34.0% 34.0 34.0%Common Equity 834,712 1,062,300 1,260,823 1,489,092 1,737,830 Minor it ies & Outside Distbn. 0 .0 0 .0% 0.0% 0.0 0.0%RWA 10,584,651 11,751,362 13,161,525 15,004,139 17,104,718 ROA 0.7 1.0% 1.0% 1.1 1.0%Avg. RWA 9,826,913 11,168,006 12,456,443 14,082,832 16,054,428 RORWA 1.0 1.6% 1.6% 1.7 1.7%

Equity/Assets 5.4 5.5% 5.9% 6.1 6.0%ROE 12.1 18.9% 16.9% 17.8 16.9%



17/26

17



JPM Q-ProfileBank of Baroda (INDIA / Financials)As Of: 17-May-2013 [email protected]

Local Share Price Current: 728.65 12 Mth Forward EPS Current: 130.21

Earnings Yield (& local bond Yield) Current: 18% Implied Value Of Growth* Current: - 29 .69%

PE (1Yr Forward) Current: 5.6x Price/Book Value Current: 1.1x

ROE (Trailing) Current: 20.85 Dividend Yield (Trailing) Current: 2.43

Summary

Bank of Baroda 5275.90 As Of:

INDIA 1.504914 SEDOL 6099778 Local Price: 728.65

Financials Commercial Banks EPS: 130.21

Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg

12mth Forward PE 5.60x 1.52 10.95 5.60 5.15 9.52 0.78 -73% 96% 0% -8%

P/BV (Trailing) 1.05x 0.32 2.34 0.99 0.99 1.87 0.11 -69% 123% -6% -6%

Dividend Yield (Trailing) 2.43 1.31 11.20 2.84 4.05 9.22 -1.11 -46% 361% 17% 67%

ROE (Trailing) 20.85 8.33 23.62 16.40 16.87 24.96 8.77 -60% 13% -21% -19%

Implied Value of Growth -29.7% -2.98 0.26 -0.42 -0.82 0.87 -2.52 -905% 189% -42% -178%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

17-May-13

-100.00

-50.00

0.00

50.00

100.00

150.00

200.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0%

10%

20%

30%

40%

50%

60%

70%

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

12Mth fwd EY India BY Proxy

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

-3.50

-3.00

-2.50

-2.00

-1.50

-1.00

-0.50

0.000.50

1.00

1.50

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

PBV hist PBV Forward

0.00

5.00

10.00

15.00

20.00

25.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12 0.0

2.0

4.0

6.0

8.0

10.0

12.0

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


18/26

18



JPM Q-ProfileBank of India (INDIA / Financials)As Of: 17-May-2013 [email protected]





Summary

Bank of India 3370.84 As Of:




12mth Forward PE 5.41x 1.68 11.73 5.28 5.28 9.55 1.02 -69% 117% -2% -2%

P/BV (Trailing) 0.88x 0.25 2.96 0.91 1.00 2.11 -0.10 -72% 236% 3% 14%

Dividend Yield (Trailing) 2.13 0.96 14.60 2.44 4.20 10.46 -2.06 -55% 584% 14% 97%

ROE (Trailing) 13.96 7.03 26.91 14.90 16.41 30.13 2.70 -50% 93% 7% 18%

Implied Value of Growth -34.2% -4.61 0.33 -0.41 -0.75 1.13 -2.63 -1248% 195% -20% -120%


17-May-13

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0%

10%

20%

30%

40%

50%

60%

70%

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

100.00

200.00

300.00

400.00

500.00

600.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

-0.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

5.00

10.00

15.00

20.00

25.00

30.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12 0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


19/26

19



JPM Q-ProfilePunjab National Bank (INDIA / Financials)As Of: 17-May-2013 [email protected]





Summary

Punjab National Bank 4739.90 As Of:




12mth Forward PE 5.18x 3.72 9.84 6.61 6.42 9.19 3.64 -28% 90% 28% 24%

P/BV (Trailing) 0.96x 0.61 2.23 1.38 1.40 2.11 0.69 -36% 133% 45% 46%

Dividend Yield (Trailing) 2.86 0.87 4.86 2.00 2.09 3.51 0.66 -69% 70% -30% -27%

ROE (Trailing) 19.40 15.56 24.32 19.94 20.17 25.83 14.51 -20% 25% 3% 4%

Implied Value of Growth -40.1% -1.14 0.18 -0.27 -0.34 0.28 -0.96 -185% 145% 34% 15%


17-May-13

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0%

5%

10%

15%

20%

25%

30%

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

-1.40

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

5.00

10.00

15.00

20.00

25.00

30.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12 0.0

1.0

2.0

3.0

4.0

5.0

6.0

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

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Feb/11

Sep/11

Apr/12

Nov/12


20/26

20



JPM Q-ProfileState Bank of India (INDIA / Financials)As Of: 17-May-2013 [email protected]

Local Share Price Current: 238 4.5 0 12 Mth Forward EPS Current: 249.66

Earnings Yield (& local bond Yield) Current: 10% Implied Value Of Growth* Current: 24.01%



Summary

State Bank of India 28065.46 As Of:

INDIA 14.622932 SEDOL 6100799 Local Price: 2,384.50



12mth Forward PE 9.55x 2.73 20.56 7.86 8.23 16.02 0.44 -71% 115% -18% -14%

P/BV (Trailing) 1.31x 0.60 2.93 1.23 1.29 2.24 0.34 -55% 124% -6% -2%

Dividend Yield (Trailing) 1.55 0.59 3.15 1.69 1.81 2.97 0.65 -62% 104% 9% 17%

ROE (Trailing) 17.49 10.27 22.14 16.40 16.58 22.87 10.28 -41% 27% -6% -5%

Implied Value of Growth 24.0% -1.22 0.61 -0.02 -0.13 0.81 -1.07 -609% 153% -107% -155%


17-May-13

-100.00

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0%

5%

10%

15%

20%

25%

30%

35%

40%

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

-1.50

-1.00

-0.50

0.00

0.50

1.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

Mar/08

Oct/08

M

ay/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12


0.00

5.00

10.00

15.00

20.00

25.00

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

M

ar/01

Oct/01

May/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

M

ar/08

Oct/08

May/09

Dec/09

Jul/10

Feb/11

Sep/11

Apr/12

Nov/12 0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Apr/98

Nov/98

Jun/99

Jan/00

Aug/00

Mar/01

Oct/01

M

ay/02

Dec/02

Jul/03

Feb/04

Sep/04

Apr/05

Nov/05

Jun/06

Jan/07

Aug/07

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M

ay/09

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Sep/11

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Nov/12


21/26

21



Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document

individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.

Important Disclosures

Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Bank of India,State Bank of India within the past 12 months.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Bank of Baroda, Bank ofIndia, Punjab National Bank, State Bank of India.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investmentbanking clients: Bank of India, State Bank of India.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the followingcompany(ies) as clients, and the services provided were non-investment-banking, securities-related: Bank of Baroda, Bank of India,Punjab National Bank, State Bank of India.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,and the services provided were non-securities-related: Bank of Baroda, Bank of India, Punjab National Bank, State Bank of India.

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Bank ofIndia, State Bank of India.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment bankingservices in the next three months from Bank of India, State Bank of India.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or servicesother than investment banking from Bank of Baroda, Bank of India, Punjab National Bank, State Bank of India.

J.P. Morgan Securities plc and/or its affiliates (J.P. Morgan) is acting as a Joint Lead Manager and Bookrunner to State Bank of Indiaon its fixed Rate Senior Unsecured USD-denominated 144A/Reg S bond offering as announced on 3 Apr 2013. J.P. Morgan will be

receiving fees for so acting. J.P. Morgan may perform, or may seek to perform, other financial or advisory services for State Bank of Indiaand/or its affiliates and may have other interests in or relationships with State Bank of India and/or its affiliates, and receive fees,commissions or other compensation in such capacities. This research report and the information herein is not intended to serve as anendorsement of the proposed transaction or result in procurement, withholding or revocation of a proxy or any other action by a securityholder. This report is based solely on publicly available information. No representation is made that it is accurate or complete.

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgancovered companies by visiting https://mm.jpmorgan.com/disclosures/company , calling 1-800-477-0406, or [email protected] with your request. J.P. Morgans Strategy, Technical, and Quantitative Research teams mayscreen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or [email protected] .
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companymailto:[email protected]:[email protected]:[email protected]://mm.jpmorgan.com/disclosures/companymailto:[email protected]:[email protected]


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Date Rating Share Price(Rs)

Price Target(Rs)

21-Nov-07 N 357.25 420.00

09-Mar-10 UW 610.35 590.00

30-Jul-10 N 734.20 800.00

02-Oct-10 OW 887.20 1025.00

29-Oct-10 OW 1011.00 1125.00

06-Mar-11 OW 883.25 1050.00

29-Apr-11 N 941.80 1000.00

01-Jun-11 N 863.95 900.00

13-Jan-12 N 728.20 750.00

26-Jan-12 UW 760.25 675.00

31-Jul-12 UW 672.40 650.00

11-Sep-12 UW 633.10 600.00

21-Nov-12 UW 723.50 700.00

11-Apr-13 UW 648.75 625.00


Price Target(Rs)

18-Oct-06 UW 162.05 110.00

21-Nov-07 N 348.50 380.00

09-Mar-10 UW 341.05 340.00

11-Aug-10 OW 435.90 485.00

02-Oct-10 OW 525.10 590.00

24-Oct-10 N 537.45 590.00

06-Jan-11 OW 443.15 590.00

06-Mar-11 OW 460.35 520.00

03-May-11 N 457.10 450.00

01-Jun-11 UW 448.15 405.00

26-Jul-11 UW 403.30 360.00

08-Nov-11 UW 327.80 315.00

13-Jan-12 UW 299.80 270.00

11-Sep-12 UW 261.00 250.00

0

279

558

837

1,116

1,395

1,674

Price(Rs)

Oct

06

Jul

07

Apr

08

Jan

09

Oct

09

Jul

10

Apr

11

Jan

12

Oct

12

Bank of Baroda (BOB.BO, BOB IN) Price Chart

OW Rs1,125N Rs900 UW Rs700

OW Rs1,025N Rs1,000 UW Rs675UW Rs600

N Rs420 UW Rs590N Rs800OW Rs1,050 N Rs750UW Rs650UW Rs6

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Initiated coverage Nov 21, 2007.

0

149

298

447

596

745

894

Price(Rs)

Oct

06

Jul

07

Apr

08

Jan

09

Oct

09

Jul

10

Apr

11

Jan

12

Oct

12

Bank of India (BOI.BO, BOI IN) Price Chart

N Rs590N Rs450

OW Rs590OW Rs520UW Rs360UW Rs270

Rs110 N Rs380 UW Rs340OW Rs485OW Rs590UW Rs405UW Rs315 UW Rs250


Initiated coverage Oct 18, 2006.


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Price Target(Rs)

20-Nov-07 UW 612.45 678.00

21-Nov-07 OW 553.30 678.00

08-Mar-10 OW 927.75 1000.00

10-May-10 N 1014.05 1050.00

27-Jul-10 OW 1038.85 1200.00

02-Oct-10 OW 1307.80 1525.00

06-Mar-11 OW 1081.40 1350.00

05-May-11 OW 1091.50 1300.00

01-Jun-11 OW 1099.60 1200.00

13-Jan-12 OW 902.85 975.00

01-Feb-12 UW 955.80 850.00

10-May-12 UW 767.45 700.00

28-Jul-12 UW 755.95 675.00

11-Sep-12 UW 685.95 650.00

21-Nov-12 UW 730.45 700.00

11-Apr-13 UW 709.60 650.00


Price Target(Rs)

20-Nov-07 OW 2150.85 2847.00

06-Jan-10 N 2305.80 2300.00

09-Mar-10 N 2044.60 2100.00

11-Aug-10 UW 2650.85 2400.00

02-Oct-10 N 3272.15 3300.00

14-Jan-11 N 2560.70 2800.00

25-Apr-11 OW 2861.15 3200.00

18-May-11 OW 2414.70 3000.00

01-Jun-11 OW 2237.30 2700.00

14-Aug-11 OW 2196.95 2400.00

13-Jan-12 OW 1764.40 1950.00

06-Mar-12 OW 2176.05 2300.00

11-Aug-12 OW 1968.75 2100.00

21-Nov-12 OW 2066.50 2300.00

04-Jan-13 OW 2486.70 2600.00

11-Apr-13 OW 2042.35 2200.00

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated

Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, ifapplicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policyreasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not arecommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return iscompared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appearin the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans researchwebsite, www.jpmorganmarkets.com.

0

361

722

1,083

1,444

1,805

2,166

Price(Rs)

Oct

06

Jul

07

Apr

08

Jan

09

Oct

09

Jul

10

Apr

11

Jan

12

Oct

12

Punjab National Bank (PNBK.BO, PNB IN) Price Chart

OW Rs1,200OW Rs1,200 UW Rs700UW Rs700

OW Rs678 N Rs1,050 OW Rs1,300UW Rs850UW Rs650

UW Rs678 OW Rs1,000OW Rs1,525OW Rs1,350 OW Rs975UW Rs675UW Rs6



0

878

1,756

2,634

3,512

4,390

5,268

Price(Rs)

Oct

06

Jul

07

Apr

08

Jan

09

Oct

09

Jul

10

Apr

11

Jan

12

Oct

12

State Bank of India (SBI.BO, SBIN IN) Price Chart

OW Rs2,700 OW Rs2,

N Rs2,100N Rs3,300OW Rs3,000OW Rs2,300OW Rs2,600

OW Rs2,847 N Rs2,300UW Rs2,400N Rs2,800OW Rs3,200OW Rs2,400OW Rs1,950OW Rs2,100OW Rs2,300




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Coverage Universe: Sen, Seshadri K: Axis Bank Ltd (AXBK.BO), Bank of Baroda (BOB.BO), Bank of India (BOI.BO), HDFC(Housing Development Finance Corporation) (HDFC.BO), HDFC Bank (HDBK.BO), ICICI Bank (ICBK.BO), IDFC (IDFC.BO), INGVysya Bank (VYSA.NS), IndusInd Bank (INBK.BO), Kotak Mahindra Bank (KTKM.BO), Punjab National Bank (PNBK.BO), Reliance

Capital (RLCP.BO), State Bank of India (SBI.BO), Yes Bank (YESB.BO)

J.P. Morgan Equity Research Ratings Distribution, as of March 30, 2013

Overweight

(buy)Neutral

(hold)Underweight

(sell)

J.P. Morgan Global Equity Research Coverage 43% 44% 13%IB clients* 54% 47% 38%

JPMS Equity Research Coverage 42% 50% 9%IB clients* 74% 64% 57%

*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table

above.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report athttp://www.jpmorganmarkets.com, contact the primary analystor your J.P. Morgan representative, or [email protected] .

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, publicappearances, and trading securities held by a research analyst account.

Other Disclosures

J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketingname for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.

All research reports made available to clients are simultaneously available on our client website, J.P. Morgan Markets. Not all research content isredistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your salesrepresentative.

Options related research: If the information contained herein regards options related research, such information is available only to persons who havereceived the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,

please contact your J.P. Morgan Representative or visit the OCC's website athttp://www.optionsclearing.com/publications/risks/riskstoc.pdf

Legal Entities Disclosures

U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in theUK by the Financial Services Authority. U.K.: J.P. Morgan Securities plc (JPMS plc) is a member of the London Stock Exchange and is authorized andregulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 25 Bank Street, London, E14 5JP. South

Africa: J.P. Morgan Equities South Africa Proprietary Limited is a member of the Johannesburg Securities Exchange and is regulated by the FinancialServices Board. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority andthe Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial

Supervisory Service. Australia: J.P. Morgan Australia Limited (JPMAL) (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P.Morgan Securities Australia Limited (JPMSAL) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by ASIC and is a Market, Clearing andSettlement Participant of ASX Limited and CHI-X. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange

(company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited, having its registered office at J.P.Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National Stock Exchange of India Limited (SEBIRegistration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI Registration Number - INB

010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities (Thailand) Limited is a memberof the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Indonesia: PT J.P. MorganSecurities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines

Inc. is a Trading Participant of the Philippine Stock Exchange and a member of the Securities Clearing Corporation of the Philippines and the SecuritiesInvestor Protection Fund. It is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao deValores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is a

member of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission.Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MIC (P) 049/04/2013 andCo. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority of

Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by the MAS. Japan: JPMorgan
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