SIB earnings were slightly below estimates on back of lower treasury gains, but bank continues to strengthen its core operating performance with improving loan growth to 16-17% (partly due to base effect) leading to better NII. Opex excluding the wage provisions (Rs100mn provision) was also under control. CASA remains slow on base effect from demonetisation but ratio remains stable. Bank has maintained its key guidances’ for FY18 on loan growth/margins/credit cost/slippages and we expect FY19/FY20 would see further improvement in return ratios as SIBs legacy balance sheet issues are now taken care and business focus has returned. Retain BUY with TP of Rs 40 (from Rs 37) based on 1.5x Sep-19E ABV.
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