State Bank Of India reports 28.1% Net Income decline while 5.7% Revenue growth

27 May 2016 • About State Bank Of India ($SBID) • By InTwits

State Bank Of India reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

State Bank Of India has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 3.7%.
CAPEX is quite volatile: 365,465 in 2016, 675,758 in 2015, 282,816 in 2014, 244,824 in 2013, 192,566 in 2012
The company has potentially unprofitable business model: ROIC is at 3.5%
It operates with high leverage: Net Debt/EBITDA is 7.5x while industry average is

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

State Bank Of India ($SBID) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	1,760,138	2,015,100	2,260,683	2,579,526	2,725,501	5.7%
Net Income	153,431	179,162	141,738	169,943	122,246	-28.1%
Balance Sheet
Cash	791,992	895,740	1,140,956	1,442,875	1,604,246	11.2%
Short Term Debt	513,454	619,556	235,484	440,087	391,631	-11.0%
Long Term Debt	1,579,895	2,037,200	2,237,597	2,446,592	2,582,102	5.5%
Cash flow
Capex	23,398	35,714	31,785	34,523	37,756	9.4%
Ratios
Revenue growth	19.9%	14.5%	12.2%	14.1%	5.7%
Net Income Margin	8.7%	8.9%	6.3%	6.6%	4.5%	-2.1%
CAPEX, % of revenue	1.3%	1.8%	1.4%	1.3%	1.4%	0.0%
ROIC	7.6%	6.7%	4.9%	5.5%	3.5%	-2.0%
ROE	16.2%	15.5%	10.4%	11.0%	7.1%	-3.9%

Revenue and profitability

The company's Revenue increased on 5.7% in FY2016.

Net Income marign decreased on 2.1 pp from 6.6% to 4.5% in FY2016.

Capital expenditures (CAPEX) and working capital investments

In FY2016 the company had CAPEX/Revenue of 1.4%. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 1.4%.

Return on investment

The company operates at low ROIC (3.52%) and ROE (7.15%). ROIC decreased on 2.0 pp from 5.5% to 3.5% in FY2016. ROE decreased on 3.9 pp from 11.0% to 7.1% in FY2016.

Leverage (Debt)

Debt increased on 3.0% in FY2016 while cash jumped on 11.2% in FY2016.

Appendix 1: Peers in Banks

Below you can find State Bank Of India benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Kazkommertsbank JSC ($KKB)		6.0%	16.3%	41.4%
Sberbank Of Russia ($SBER)	37.2%	25.1%	23.4%	27.4%
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	37.6%	23.7%	18.9%	26.8%
Yapi Ve Kredi Bankasi As ($YKBD)	14.9%	4.8%	19.7%	25.3%
Mcb Bank Ltd ($MCBS)	3.0%	-1.7%	19.4%	22.4%
Median (43 companies)	8.8%	4.2%	11.5%	4.2%	1.0%
State Bank Of India ($SBID)		14.5%	12.2%	14.1%	5.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Banque Marocaine Du Comm Exterieur ($69IR)	3.7%	9.7%	4.3%	26.8%
Lloyds Banking Group ($LLPC)	8.0%	8.9%	13.1%	13.6%	14.5%
Banco Santander Sa ($BNC)	2.7%	2.6%	8.9%	10.2%
Guaranty Trust Bank ($GRTB)	6.7%	6.1%	6.8%	7.7%
Diamond Bank ($DBPA)	8.2%	7.9%	6.0%	6.7%
Median (41 companies)	2.4%	2.8%	2.2%	2.5%	2.9%
State Bank Of India ($SBID)	1.3%	1.8%	1.4%	1.3%	1.4%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	21.7%	26.9%	30.1%	30.3%
Guaranty Trust Bank ($GRTB)	19.8%	18.9%	17.8%	16.0%
Mcb Bank Ltd ($MCBS)	15.0%	14.4%	15.8%	14.9%
United Bank Ltd ($UBLS)	11.7%	11.8%	13.8%	12.6%
Zenith Bank ($ZENB)	19.0%	17.6%	15.0%	11.2%
Median (43 companies)	6.0%	5.3%	4.4%	3.4%	2.9%
State Bank Of India ($SBID)	7.6%	6.7%	4.9%	5.5%	3.5%

State Bank Of India stock price chart

State Bank Of India financials

mln.	FY2010	FY2011	FY2012

Revenue	1,349,925	1,468,596	1,760,138
EBITDA	0.000	0.000	0.000
Net income	117,338	106,849	153,431
CAPEX	21,219	18,742	23,398
Debt	1,776,381	1,942,077	2,093,349
Cash	821,956	1,193,498	791,992

About State Bank Of India

State Bank of India provides various banking products and services in India and internationally. It offers personal banking products and services, including current accounts, savings accounts, term deposits, and capital gain schemes; housing, car, property, educational, personal, festival, career, scholar, and gold loans, as well as loans for pensioners and loans against shares/debentures; and mobile and Internet banking, demat, ATM, foreign inward remittance, safe deposit locker, public provident fund, multi-city cheques, money transfer, and mobile wallet services, as well as cards and inflation indexed national savings securities-cumulative bonds. The company also provides corporate banking services comprising corporate accounts, working capital and project finance, deferred payment guarantees, corporate term loans, structured finance, dealer and channel financing, equipment leasing, loan syndication, construction equipment loans, financing Indian firms overseas subsidiaries or JVs, and cash management products; products for NRIs, including accounts and deposits, loans, remittances, and investments; agricultural banking and micro credit to agriculturists and landless agricultural laborers; and current accounts, deposits, transaction banking, asset backed loans, fleet finance schemes, and collateral free loans for SME customers. In addition, it offers international banking products and services; broking, bill payment, and online railway ticket booking; and credit cards, life and general insurance, mutual funds, factoring, security trading, pension fund management, and custodial services, as well as primary dealership services in the money market. The company operates through 21,977 branches, including 6,108 branches of its 5 associate banks; and 51,491 ATMs. State Bank of India was founded in 1806 and is based in Mumbai, India.