Banking Monthly. Manish Agarwalla Sachit Motwani, CFA, FRM

Banking Monthly Manish Agarwalla Sachit Motwani, CFA, FRM 26 February 214

Summary Industrial indicators such as IIP, PMI, and core sector data have improved vs previous months; however, this is only a marginal positive as most macro indicators are already subdued (December 213 IIP was.6), and a significant pickup is unlikely in the near term. While we see some respite in industrial indicators, core inflation has continued to move up and remains a cause of concern. Banking Performance Even in Q3FY14, the outperformance of private banks continued they reported a healthy earnings growth of 19% YoY driven by stable NIMs and controlled opex. In line with expectations, PSU banks reported a 31% YoY decline in earnings owing to elevated credit costs, higher opex and higher tax due to creation of DTL (deferred tax liability) on special reserves. While private banks reported stable NIMs, some large PSU banks (SBI, PNB and BOB) saw NIM improvement while most others reported flat NIMs. Large banks also benefited from mobilization of FCNR (B) deposits raised in Q3FY14. Private banks managed asset quality well with absolute GNPAs increasing only by 4.7% QoQ. However, their absolute NNPAs increased by 15% QoQ and PCR (provision coverage ratio) declined marginally. Within private banks, ICICI Bank and IndusInd Bank reported higherthanexpected assetquality stress while HDFC Bank surprised positively. ICICI Bank also reported a sharp spike (2x QoQ) in fresh restructuring. For PSU banks, the fresh NPL accretion moderated with slippage ratio almost flat QoQ. Consequently, GNPAs increased by 5.3% QoQ while NNPAs increased by 7.% QoQ and PCR declined marginally. Within the PSU space, BOB, PNB and Indian Bank reported a QoQ decline in slippages. However, SBI disappointed on asset quality with 37% QoQ increase in slippages; however, higher writeoffs enabled SBI to report only a 5.6% QoQ increase in absolute GNPAs. Most PSU banks in our coverage reported decline in outstanding restructured book due to receipt of SEB (State Electricity Board) bonds. Guidance highlights and management commentary The guidance and management commentary was divergent, not just between private and PSU banks, but also within PSU/private banks. For instance, while SBI and few other PSU banks indicated that the asset quality stress will probably continue over the next few quarters, BOB and PNB advised sustainability in their performance. Private Banks like Axis Bank and ICICI Bank signaled further asset quality stress, but Indusind Bank said its asset quality might witness marginal improvement. 2

BFSI 3

Banking: Business aggregates 25 2 15 1 5 Sector wise credit growth (%) Non-Food Credit Agriculture Industry Retail Services 7 76 74 72 7 6 66 64 SCB Business aggregates Deposit Gwth (%) Credit Gwth (%) CD ratio (rhs) 33 2 23 1 13 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Sep 3, 211 Nov 1, 211 Jan 13, 212 Mar 23, 212 May 4, 212 Jun 29, 212 Aug 31, 212 Oct 19, 212 Dec 14, 212 Feb 22, 213 Apr 19, 213 Jun 14, 213 Aug 23, 213 Oct 4, 213 Nov 29, 213 Feb 7, 214 Growth Rate (%) Basic Metal & Metal products 15.1 CRE 14.6 All engineering 16.3 NBFC 15.1 Housing 17.7 Iron & Steel 14.9 Power 21.2 Credit growth continues to remain moderate at 15.9% YoY as on Feb 7, 214 due to poor demand amidst weak economic environment. Deposit accretion which had garnered pace due to FCNR deposit mobilization has also now moderated to 15.6% YoY as on Feb 7, 214. Within sectors, the credit growth was driven by services and retail, while within industry, the growth was led by power segment. Source: Bloomberg, PhillipCapital India Research 4

Banking: Deposit and base rate of top banks Current less than 1yr 1-2yr More than 2yr Axis Bank 3.5-.75.75-9..5-.75 BOB 4.5-.25 9.1 9.1 BOI 4.-. 9.5.75-9.5 HDFC BANK 3.5-.75.75.25-.75 ICICI Bank 4.5-7.75.-9..5-.75 PNB 4-. 9. 9. SBI 7.5 9..5-9. UBI 4.-.55 9.75-9. Deposit rates were largely unchanged in most of the buckets across banks. Private banks maintained status quo while PSU banks marginally reduced rates at longer end. The effective cost in rupee terms for banks on FCNR deposit translates to.6%-.% and moreover these deposit are exempted from CRR and SLR requirement. These cost effective liquidity flow will enable banks to reduce cost of deposit and help boost margin though marginally. Base Rate Oct 213 Nov 213 Axis Bank 1.25 1.25 BOB 1.25 1.25 BOI 1.25 1.25 HDFC BANK 9. 1. ICICI Bank 1.25 1.25 PNB 1.25 1.25 SBI 9. 1. UBI 1.25 1.25 Source: Company, PhillipCapital India Research Given the subdued credit offtake, most banks also maintained their base rates despite revision in policy rates. If credit outlook improves, banks will have to raise deposit rates in order to attract more deposits for meeting the credit demand, which will eventually result in increase in base rates. 5

Banking: Capex data Project Stalled 9, 1,, 7, 6, 5, 4, 3, 2, 1, - Stalled, bn % of implementation (rhs) 12% 1% % 6% 4% 2% % Under Implementation 9,, 7, 6, 5, 4, 3, 2, 1, Under implementation Rs bn YoY (%), RHS 6% 5% 4% 3% 2% 1% % 6 Mar-7 Jun-7 Sep-7 Dec-7 Mar- Jun- Sep- Dec- Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-7 Jun-7 Sep-7 Dec-7 Mar- Jun- Sep- Dec- Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 New Projects 9,, 7, 6, 5, 4, 3, 2, 1, New Projects, Rs bn YoY (%), RHS 2% 15% 1% 5% % -5% -1% Source: CMIE, PhillipCapital India Research New project announcements have shown a strong increase of 165% YoY and 55% QoQ. Outstanding project under implementation however has remained stagnant at Rs 3 trn. Proportion of stalled projects remain at 1% of project under implementation compared to average proportion of 5% largely on account of land/environment clearance & fuel availability. Mar-7 Jun-7 Sep-7 Dec-7 Mar- Jun- Sep- Dec- Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13

Banking: Asset quality aggregates 7. 6. 5. 4. 3. Outstanding restructured portfolio (% to gross advances) Private PSB Outstanding restructured stock of PSBs declined by 35 bps QoQ to 5.6% driven by conversion of SEB loans into bonds under the FRP. The restructured portfolio of private banks increased by 13 bps QoQ to 1.6% driven by higher restructuring for ICICI Bank. Huge CDR pipeline and delays in infrastructure will lead to elevated level of fresh restructuring during FY15 as well. 2. 1. CDR referrals as on Q3FY14 stood elevated at Rs 377 bn.. FY FY9 FY1 FY11 FY12 FY13 Q1FY14 Q2FY14 Q3FY14 Given the elongated period of slowdown, corporate which were restructured previously has high probability of slipping to non performing category. Gross Slippage 4. 3.5 3. 2.5 2. Private bank PSB Real GDP Growth %, rhs 1 9 7 Pace of gross slippages have moderated with improvement seen in banks like PNB, BOB and Indian Bank. Slippage ratio for the industry was flat at 2.5%. Gross slippages (annualized) for PSBs stood at 2.% while it was 1.2% for private banks. 1.5 1..5 6 5 The stress has now broad-based covering most of the industry.. 4 Source: Company, PhillipCapital India Research 7

Banking valuation Private Bank 1 GDP Growth %, lhs Interest rate %, lhs P/ABV +1.65SD -1.65SD 4. Historically, 9% of the time, Private banks have traded in the range of 3x 1.4x, 1yr forward ABVPS 6 4 4. 3.2 2.4 1.6 Current valuation of 2x is below the median valuation of 2.2x. Private banks are trading at ~ 14% premium to PSBs (highest since peak of March 2) 2.. Feb-6 Feb-7 Feb- Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Feb-14 1 6 4 2 Public Bank GDP Growth %, lhs Interest rate %, lhs PS Banks (P/ABV) +1.65SD -1.65SD 2.4 2. 1.6 1.2..4 Historically, 9% of the time, PSBs have traded in the range of 1.65x.75x, 1yr forward ABVPS. Current valuation of.7x is a 4% discount to median valuation of 1.2x. The slowing economic activity (slowest in last 1 years) may lead to further downside in asset quality and therefore its valuation.. Feb-6 Feb-7 Feb- Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Feb-14 Source: PhillipCapital India Research

NBFC Contribution of fleet operator; Mortgage rate; Auto sales.65 Contribution (Freight fuel cost) Rs per tone Kilometer Delhi Mumbai Delhi Delhi Kolkata Delhi Delhi Chennai Delhi Delhi Nagpur Delhi (rhs 1.5 3 Auto Sales Passenger vehicles growth (YoY) CV sales growth (YoY) Two wheeler sales (YoY).6 1. 2.55.5.45.95.9.5. 1-1 -2-3.4.75-4 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 14 13 12 11 1 9 HDFC Ltd lending rates The contribution (freight fuel cost) has improved across various route in last 2-3 months. However there is no definitive signs of improvement in utilization levels, thus keeping the cash flows of the fleet operators under stress. The mortgage rates continues to drift downward during FY14 (despite some hardening of deposit rate) owing to increased competition in the segment. Barring two wheelers, the auto sales (passenger car / Commercial vehicle) continued to decline on YoY basis. Source: PhillipCapital India Research 9

Life Insurance: Total premium Total Industry 35 Total premium (Rs bn) Growth (YoY) (rhs) 6 Total premium for the life insurance industry (new + renewal) declined by.3% YoY in FY13 (-1.3% in FY12). 3 25 5 4 Total premiums for LIC increased by 2.9% YoY in FY13 (-.2% YoY in FY12) 2 15 1 5 3 2 1 In terms of new business, APE for life insurance industry declined by 15.3% YoY driven by a sharp decline in APE for LIC due to higher growth in single premium policies and a sharp decline in First year premiums. FY6 FY7 FY FY9 FY1 FY11 FY12 FY13-1 Private Insurers Total premium (Rs bn) Growth (YoY) (rhs) 1 9 7 6 5 4 3 2 1 FY6 FY7 FY FY9 FY1 FY11 FY12 FY13 Source: PhillipCapital India Research 12 1 6 4 2-2 Private insurer s total premium declined by.1% YoY in FY13 as against a decline of 3.% in FY12. In terms of new business, APE of private players increased by 3.9% YoY in FY13 (-17.% in FY12) Owing to a sharp decline in LIC s APE over the last few months, private players market share has stabilized at 4%+. 1

Life insurance: Annualized Premium Equivalent (APE) LIC V/s Private APE (Rs mn) LIC Pvt 5 4 3 2 1 FY9 FY1 FY11 FY12 FY13 9MFY14 LIC V/s Private Market Share LIC Pvt 12 1 41.3 34. 39.5 34.5 57. 53.1 6 4 5.7 65.2 6.5 65.5 2 42.2 46.9 FY9 FY1 FY11 FY12 FY13 9MFY14 Source: PhillipCapital India Research New business premium (NBP) for life insurance companies increased by 22.5% YoY to Rs 47.2 bn as on 9MFY14. NBP for LIC increased by 3.6% YoY while for private insurers increased only marginally by.3% YoY. Healthy growth was driven by strong product push before the new regulatory product regime (new norms for traditional insurance plans) coming into play from Jan 1, 214. New traditional products from Jan 1, 214 will have lower surrender values, high risk cover and agent s commission linked to tenure of the policy. This will also impact the NBAP margins on traditional products which had been dominating the product mix in the last few years. In terms of APE, the total industry growth was 9.5% YoY as LIC had witnessed a strong growth in single premiums. Amongst major private insurers, strong growth was witnessed by Reliance Life, SBI Life and Max Life, while HDFC Life and ICICI Life saw contraction in their NBP collection. LIC dominance continued with its market share improving to 65.5% as on 9MFY14 as against 6.5% as on FY13 driven by aggressive pushing of traditional products before new product norms kicking in. 11

Life insurance: APE Trend SBI Life Reliance Life 7 APE (Rs mn) Growth (YoY) (rhs) 1 4 APE (Rs mn) Growth (YoY) (rhs) 2 6 5 4 3 2 1 FY FY9 FY1 FY11 FY12 FY13 9MFY14 6 4 2-2 -4-6 35 3 25 2 15 1 5 FY FY9 FY1 FY11 FY12 FY13 9MFY14 15 1 5-5 -1 HDFC Standard ICICI Prudential 4 APE (Rs mn) Growth (YoY) (rhs) 9 APE (Rs mn) Growth (YoY) (rhs) 35 3 25 2 15 1 5 6 4 2-2 7 6 5 4 3 2 1 6 4 2-2 FY FY9 FY1 FY11 FY12 FY13 9MFY14-4 FY FY9 FY1 FY11 FY12 FY13 9MFY14-4 Source: PhillipCapital India Research 12

MACRO 13

Policy rates 12 1 6 4 2 Policy Rate (%) WPI for January declined 5.5% (Vs 6.2% in Dec 13). In the previous monetary policy, the central bank increased its repo rate by 25bps to %. RBI hiked repo rate in the last monetary policy due to higher core inflation. Thus, we believe even if headline inflation has fallen significantly, possibility of rate cut stands weak as long as core inflation is rising. As per our economist Anjali Verma, inflation is expected to inch higher in the next few months, thus, expect RBI to maintain status quo in the April monetary policy review. Our in-house view on average WPI for FY15 is 6%- 6.5%. Real Interest Vs Deposit Growth 25 2 Real Interest rate (%) Deposit Growth (%) With inflation coming down and deposit rates remaining high, the real interest rates have become positive. 15 1 Stable positive real interest will augur well for the banks deposit growth going forward. 5-5 Adequate liquidity available with banks, lack of credit demand, interest on deposit may remain stable in near terms. Jan-11 May-11 Sep-11 Jan-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Apr-11 WPI Repo Rate SBI 1yr Dep Rate CRR Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Source: Bloomberg, PhillipCapital India Research 14

Yield curve Yield Curve (%) 1 yr CD rate 9.25 Jan 14 Dec 13 Feb 14 16 14 9 12.75 1.5.25 6 4 2 G-Sec 1yr G-Sec 2yr G-Sec 3yr G-Sec 4yr G-Sec 5yr G-Sec 1yr Feb- Aug- Feb-9 Aug-9 Feb-1 Aug-1 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 AAA Corporate Bond Spread over G-Sec 1 Yr spread 2 Yr spread 3 Yr spread 4 Yr spread 5 Yr spread Oct-13.52 1.15 1.22 1.1.94 Nov-13.73 1.16 1.27 1.19 1.12 Dec-13.9 1.26 1.29 1.1.74 Yield curve February has shifted upward following repo hike by RBI. 1Yr Gsec touched a high of.92% during the month before softening marginally. The short term corporate bond rates and CD rates have also witnessed increase following policy rate hike. Jan-14 1.19 1.11.96.77.3 Feb-14 1.33.9 1.7.3.75 Source: Bloomberg, PhillipCapital India Research 15

Money supply data LAF (Repo) / Rev. Repo Factors affecting liquidity 5 LAF (Rs bn) Call Rate (rhs) 12 1 6 Change in Curr. In circulation (m-o-m Rs bn) Change in Govt. cash balance (m-o-m Rs bn) -5-1 6 4 2-15 -2 4 2-2 -4-6 -25 Apr-11 - M3 Growth (YoY %) 1 16 14 12 1 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Jul-11 Mar-13 Oct-11 May-13 Jan-12 Jul-13 Sep-13 Nov-13 Jan-14 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 M3 growth at 14.3% YoY has increased above RBI s projection of 13%. YTD M3 growth was 11.5%. Borrowing under LAF window have narrowed since July on account of limitations enforced by RBI. Source: Bloomberg, PhillipCapital India Research 16

Fiscal conditions GOI Borrowing 6 5 Incremental net borrowing (Rs bn) GIND1YR Index (rhs) 1. 9. Increase in policy rate, rising global treasury yields and weak macro-economic fundamentals sent 1-year benchmark bond yields vaulting over.9%. 4 3 2 1. 7. 6. 5. The fiscal deficit for FY14 stood at 4.6% (4.% budgeted). The over achieved figure of 4.6% is driven by cut in plan expenditure & deferment of subsidy despite slippage in tax collection and disinvestment target. Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 4. FY15 Gross government borrowing is aimed at Rs 5.97tn vs. Rs 5.63tn in FY14. Date % of FY14 Budgeted borrowing Amount (Rs bn) Date % of FY13 borrowing Amount (Rs bn) Apr-13 9 45 Apr-12 5 23 May-13 19 923 May-12 12 54 Jun-13 2 132 Jun-12 24 1124 Jul-13 4 1972 Jul-12 34 1594 Aug-13 54 2623 Aug-12 5 2344 Sep-13 52 2553 Sep-12 5 2694 Oct-13 64 3153 Oct-12 69 3234 Nov-13 77 3753 Nov-12 79 374 Dec-13 6 423 Dec-12 7 474 Jan-14 95 4653 Jan-13 92 4314 Feb-14 1 4 Feb-13 1 4674 Mar-14 Mar-13 1 4674 Net borrowing FY14 (budgeted) 4 Net borrowing FY13 (Actual) 4674 Source: Bloomberg, PhillipCapital India Research 17

Macro snapshot Latest 1M-Ago 3M-Ago 6M-Ago 12M-Ago Forex Reserves, $Bn 29.6 295.2 294.5 29.5 295. Government Borrowing, Rs Bn 55 534 474 324 49 WPI,% 6. 6.6 7.2. 7.6 CPI,% 11.6 11.2 9.6 9. 5.3 Index of Industrial Production,% 2.4 -.5.4 -.1 1. 6-core Industry,% 4.7 2.5 4.2 1.2 2.1 Exports, $ Bn 26.3 24. 22.7 22. 25.2 Imports, $ Bn 41.2 45.7 41.3 37.4 4.1 Trade Deficit, $ bn -14.9-2. -1.6-15.3-14.9 GDP,% 5.3-5.5 5.3 6.7 Agriculture,% 1.2-2.9 1.7 3.1 Industry,% 1.2 -..7 2.7 Services,% 7.1-7.4 7.5.5 Exports, $ Bn 69. - 76.7.2 79.6 Imports, $ Bn 11.2-119. 131.7 124.1 Trade Deficit, $ Bn -4.3 - -42.3-51.5-44.5 Invisibles, $ Bn 25.9-25. 29. 25.6 Current Account Deficit, % of GDP -22.4 - -16.6-21. -1.9 Net capital flows, $ Bn 23.9-16.1 16.6 17.2 Source: Bloomberg, PhillipCapital India Research 1

Valuation matrix: Coverage universe MCap MCap CMP Gwth (12-14E) P/Adj. BV RoE (%) NII(Rs bn) NIM(%) CAR(%) Opg. Profit (Rs bn) Cost to Income ratio Rs bn US$ bn (Rs) NII % PPP% PAT% FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e Public Sector Banks Andhra Bank 31.6 55-3. -4.1-24.6.5.53.56 16.2 5.3.3 37.6 37.6 34. 2.% 2.3% 2.3% 11. 1.7 1. 27.7 22.3 25.5 42.4 53.3 54.6 Bank of India 1 1. 16.5 13. 16.3.6.56.5 12.9 12.6 13.6 9.2 9.2 16.3 2.2% 2.2% 2.2% 11. 1.6 1.1 74.6 5.9 95.3 41.7 42.4 43.4 BOB 227 4.1 53 3.3 7.4 7....73 16. 14.4 14.6 113.2 113.2 12.7 2.3% 2.1% 2.2% 13.3 13.1 12.6 9.7 91.7 14.6 39.3 43.4 44.1 Canara Bank 94 1.7 213 5.2 12.4 5.2.5.53.4 13.2 9.6 12. 7. 7. 7.2 2.1% 2.% 2.1% 12.4 1.3 9.9 5.9 64.4 74.5 46.6 4. 4.4 Corp Bank 35.6 226 6. 6.3-6..4.45.43 16.1 7.3 11.6 34.3 34.3 3.5 2.% 1.9% 1.% 12.3 11.6 1.9 3.4 32.6 34.3 39.7 41. 45. IOB 42. 45 5. 6.1 19.5.4.53.5 4.9 3. 5.4 52.5 52.5 57.9 2.3% 2.3% 2.3% 11.9 11.5 11.2 3.2 4.6 42.9 47.2 49. 52.3 Oriental Bank 47.9 161 4.2 2.5 2.2.5.47.45 11.5.9 1.2 47. 47. 51. 2.5% 2.5% 2.5% 12. 12.1 11.5 36.9 37.1 3. 41.9 44.6 46. PNB 192 3.5 544 5.4 2.7-2.2.7.7.64 16.5 1.7 12. 14.6 14.6 165.1 3.2% 3.3% 3.3% 12.7 12. 12.5 19.1 11.3 115.1 42. 46.7 5.6 SBI 142 19. 1524 4.9 4.2-5.3 1. 1..97 15.4 1.1 1. 611.6 611.6 673.4 3.2% 3.% 3.1% 12. 13. 12.5 49.2 39. 444.4 56.3 62. 62.7 Union Bank 61 1.1 12 1.7-1.7 -..5.49.47 15. 9.4 1.2 75.4 75.4 7. 2.7% 2.4% 2.3% 11.5 11. 1. 55. 52.1 53.9 44.7 5.2 53.1 Indian Bank 37.7 7-1. 4.3-7.6.4.42.36 21. 16.1 1.2 45.2 45.2 44.3 3.1% 2.6% 2.7% 13.1 12.4 11.5 3.6 2. 33.3 47.3 49.9 49.6 Private Sector Banks Axis Bank 577 1.5 1234 1.4 13.7 13.6 1. 1.55 1.36 1.5 17. 16.3 96.7 96.7 117.9 3.2% 3.4% 3.4% 17. 17.6 17.5 93. 19.3 12.3 42.6 41.7 42.5 HDFC Bank 1613 29.3 67 7.9 24.2 23.1 4.5 3.2 3.24 2.3 21.6 21. 15.1 15.1 14.2 4.5% 4.5% 4.5% 16. 17. 17.6 114.3 146.6 176.2 49.6 44. 44.1 ICICI Bank 1194 21.7 135 9.5 1. 13.9 1. 1.6 1.55 13.1 13.9 14.1 13.7 13.7 166.3 2.9% 3.1% 3.2% 1. 17.6 16.9 132. 163.5 13.9 4.6 3.1 3.6 Dvpt Cr Bank 13.2 53 13.9 39.3 24. 1.5 1.27 1.1 1.9 14. 12. 2. 2. 3.7 3.% 3.1% 3.% 13.6 13.1 12.3 1.3 1.9 2.4 6.6 62.1 5.9 NBFC's HDFC Ltd 27.5 6 1.6 16.5 16.4 5.1 4.6 4.4 17.6 16.7 16.1 61. 74.6 6.9 3.6% 3.6% 3.6% 14.7 13. 13.1 67.2 7.5 91.2 7. 7.7 7. Shriram Transport Fin 129 2.4 57.2 5.9 3.1 1. 1.64 1.46 2.6 16.6 17.1 34.6 37. 4.5 7.7% 7.% 6.9% 16.6 15.6 16.1 2.7 3.2 32.2 22.4 23.7 25.6 Source: Company, PhillipCapital India Research Estimates 19

Valuation matrix: Coverage universe PAT(Rs bn) CASA(%) EPS (Rs) Adj BV (Rs) GNPA(%) NNPA(%) FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e FY13 FY14e FY15e Public Sector Banks Andhra Bank 12.9 4.6 7.3 25.5% 25.4% 25.% 23 12 121 14 99 2.1 3. 5.4.9 2.5 3.4 Bank of India 27.5 3.7 37.2 24.5% 23.6% 23.1% 46 4 5 21 32 334 2.4 3. 2.9 1.5 2.1 1. BOB 44. 45. 52.1 25.1% 25.% 25.9% 16 16 121 657 673 734 1.6 2.4 3.4.5 1.3 1.9 Canara Bank 2.7 22.3 31. 24.1% 24.% 24.1% 65 4 69 432 43 441 1.7 2.6 2. 1.4 2.2 2.5 Corp Bank 14.3 7.3 12.5 21.6% 1.2% 1.2% 94 44 74 561 5 52 1.3 1.7 3..9 1.2 2.1 IOB 5.7 5..1 26.4% 25.9% 25.4% 6 4 6 13 4 7 2. 4.1 5.2 1.4 2.6 3.2 Oriental Bank 13.3 11.2 13.9 24.5% 24.% 23.9% 46 37 46 345 341 356 3.2 3.2 3.9 2.2 2.3 2.9 PNB 47.5 34.9 45.4 39.1% 4.2% 39.5% 134 99 12 741 776 47 3. 4.4 5. 1.5 2.4 2.7 SBI 179.2 136.3 16.7 4.3% 39.% 39.% 262 13 215 1596 1519 1574 4.3 4.6 5.7 1. 2.1 3.4 Union Bank 21.6 15.6 1.3 3.9% 29.6% 29.6% 36 25 29 224 29 215 3.1 3. 3. 1.7 1.6 2.5 Indian Bank 15. 11.2 13.5 27.6% 27.1% 27.1% 37 24 31 24 29 243 2. 3.4 3.4 1.3 2.3 2.2 Private Sector Banks Axis Bank 51. 6.5 66. 44.3% 46.3% 46.1% 111 129 141 697 796 95 1.1 1.2 1.6.3.4.5 HDFC Bank 67.3 5.4 11.9 46.5% 45.% 44.2% 2 36 43 151 177 29 1. 1. 1..2.2.3 ICICI Bank 3.3 97.2 1. 41.5% 43.1% 42.3% 72 4 93 565 614 669 3.7 3.3 3.2.6..9 Dvpt Cr Bank 1. 1.5 1.6 27.2% 25.% 24.% 4 6 6 36 42 4 4.4 3.2 2.6.6..7 NBFC's HDFC Ltd 4.5 56.6 65.7 - - - 31 36 42 157 175 2-1661. -25.... Shriram Transport Fin 13.6 12.6 14.5 - - - 6 56 64 314 34 391 3.1 3.2 3.7.5.. Source: Company, PhillipCapital India Research Estimates 2

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